Wall Street pauses on waning consumer confidence, weak earnings, small stimulus, virus worries
The Dow and Nasdaq were in decline on Tuesday while the S&P eked out a small gain as investors eyed weakening consumer confidence and disappointing business updates as well as a smaller than hoped for coronavirus aid plan from U.S. Senate Republicans.
Weighing down the Dow, industrial conglomerate 3M Co (MMM.N) dropped 4.5% after reporting a second-quarter plunge in demand across its businesses and McDonald’s Corp (MCD.N) fell 2.2% after a surprisingly big drop in global same-store sales.
Data released in the morning showed U.S. consumer confidence ebbed in July as coronavirus infections flared up across the country.
“It’s a little bit of a lot of things,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
He called the consumer survey “unsettling” evidence that “individuals are increasingly concerned about the recent surge in coronavirus impacting their finances and their mobility.”
Luschini also worried about prospects for a U.S. pandemic aid package. The $1 trillion aid proposal announced on Monday by Senate Republicans, four days before millions of Americans lose unemployment benefits, met opposition by members of both parties.
“There has be tremendous compromise from both parties to get to some agreement,” he said, noting a congressional recess scheduled for August adds deadline pressure.
“It’s particularly critical at this time since the market is really feeding off the largess that’s been expended by fiscal and monetary authorities,” he said.
At 2:18 p.m. ET, the Dow Jones Industrial Average .DJI fell 56.13 points, or 0.21%, to 26,528.64, the S&P 500 .SPX gained 1.11 points, or 0.03%, to 3,240.52 and the Nasdaq Composite .IXIC dropped 36.80 points, or 0.35%, to 10,499.46.
Materials .SPLRCM and Energy .SPNY were the biggest percentage decliners of the S&P’s 11 major sectors. Defensive real estate .SPLRCR and utilities .SPLRCU sectors were the biggest gainers.
The U.S. Federal Reserve was expected to reiterate its accommodative stance when it wraps up its two-day policy meeting on Wednesday afternoon. On Tuesday, the Fed said it would extend several lending facilities through year end, a sign the pandemic’s economic impact has been longer than expected.