US stocks slide as stimulus deadline looms

US stocks slid for the fourth time in the past five days as a deadline on US stimulus talks loomed and coronavirus cases continued to rise.

The benchmark S&P 500 closed 1.6 per cent lower on Monday, with roughly nine of every 10 stocks in the index down on the day. The technology-heavy Nasdaq Composite declined 1.7 per cent.

Investors are waiting on further news on the progress of a US fiscal stimulus package. Negotiating teams for Nancy Pelosi, the Democratic speaker of the House, and Steven Mnuchin, Treasury secretary, were working “around the clock” to see if they could strike a deal for more fiscal stimulus before the November election, a senior Democratic congressional aide said on Monday, after the latest call between Ms Pelosi and Mr Mnuchin.

Drew Hammill, a top aide to Ms Pelosi, said she had spoken with Mr Mnuchin at 3pm and they “continued to narrow their differences”.

“The speaker continues to hope that, by the end of the day Tuesday, we will have clarity on whether we will be able to pass a bill before the election,” he added. “The two principals will speak again tomorrow and staff work will continue around the clock.” Ms Pelosi has been holding out for more than $2tn in spending.

In Europe, the continent-wide Stoxx 600 closed down 0.3 per cent, while bourses in London, Frankfurt and Milan all ended the day lower.

The retreat came as Covid-19 cases increased in the US and Europe. In recent days, Belgium has imposed new restrictions on bars and restaurants and Wales has rolled out a two-week national lockdown from Friday.

“As the second wave of Covid-19 infections spreads across the west, some investors may find it hard to look beyond rising cases and fresh localised lockdowns to consider an economic recovery,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Traders weighed the deteriorating pandemic situation against upbeat growth data from China and Friday’s news that drugmaker Pfizer would apply in November for emergency US approval of its Covid-19 vaccine candidate.

Treasuries weakened alongside the stock market declines, with the yield on the 10-year note rising 1 basis point to 0.76 per cent. Yields rise when bond prices fall.

The dollar fell against the euro and British pound. Helping to lift sterling, which was up 0.2 per cent to $1.294, was a tweet from Michel Barnier, the EU’s chief Brexit negotiator, who said Brussels “remains available to intensify talks in London this week, on all subjects”.

Brent crude, the international benchmark, slipped 0.7 per cent to settle at $42.62 a barrel.

Data released by China pointed to its gross domestic product growing 4.9 per cent year on year in the third quarter, below expectations for 5.2 per cent but ahead of a 3.2 per cent increase in the second quarter.

“The latest encouraging economic data from China . . . gives us an insight into the recovery in store when a vaccine is developed and the outbreak is contained,” Mr Haefele said.

China’s CSI 300 fell 0.8 per cent but Hong Kong’s Hang Seng and Tokyo’s Topix rose 0.6 per cent and 1.3 per cent, respectively.

Additional reporting by Naomi Rovnick in London and James Politi in Washington

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