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Wall St slides amid US stimulus impasse

Noel Randewich
·3-min read

The S&P 500 has ended lower after a rise in weekly jobless claims compounded worries about a stalling US economic recovery and fading hopes for more fiscal aid before the election.

The number of people in the US filing new claims for jobless benefits rose to a two-month high last week, stoking fears the COVID-19 pandemic was inflicting lasting damage to the labour market.

A separate report showed manufacturing activity in New York State fell more than expected in October.

"Going into the fall it will be difficult for unemployment to make a lot of positive headway because of the lack of stimulus," said Christopher C Grisanti, chief equity strategist, MAI Capital Management in Cleveland.

US President Donald Trump said he is willing to raise his offer of $US1.8 trillion ($A2.5 trillion) for a COVID-19 relief deal with Democrats in Congress, but the idea was shot down by his fellow Republican, Senate Majority Leader Mitch McConnell.

The CBOE volatility index, investors' fear gauge, hit a one-week high.

The S&P 500 is down about 3.0 per cent from its September 2 record high close.

With less than 20 days until the November 3 election, Trump and Democratic challenger Joe Biden are set to hold duelling prime-time town halls on Thursday instead of their second presidential debate, which was cancelled after Trump declined to take part in a virtual matchup.

"More of what moves the market will be the crystallising of who is going to win the presidency, and how close the Senate races are," said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.

A Biden presidency, coupled with a Democratic Senate, would likely mean a larger fiscal stimulus plan than what a Republicans Senate would agree to.

However, Biden is also widely seen on Wall Street as likely to raise taxes.

Supporting the Dow Jones Industrial Average, Walgreens Boots Alliance Inc surged as the drugstore chain forecast single-digit profit growth in 2021 after reporting a better-than-expected fourth-quarter profit.

Focus is also on the quarterly results for corporate America, with expectations for third-quarter earnings improving to an 19 per cent drop from a 25 per cent tumble forecast on July 1, according to Refinitiv IBES data.

The Dow Jones Industrial Average fell 18.02 points, or 0.06 per cent, to 28,495.98, the S&P 500 lost 5.32 points, or 0.15 per cent, to 3,483.35 and the Nasdaq Composite dropped 54.86 points, or 0.47 per cent, to 11,713.87.

Morgan Stanley rose after it beat third-quarter profit estimates, winding up mixed results from major US lenders.

Recent bank earnings reports left those focused on trading clocking big gains, while retail banks took a hit from the COVID-19 pandemic.

The S&P 500 financials index climbed while communication services was among the worst performers.

The S&P 1500 airlines index dipped after United Airlines reported a 78 per cent drop in quarterly revenue.

Shares of Vertex Pharmaceuticals Inc lost close to a fifth of their value after the drug developer discontinued its trial of a protein deficiency disorder treatment.