Stocks fell on Tuesday after President Donald Trump instructed White House officials to halt negotiations on further coronavirus stimulus, sparking a sharp reversal in the major market benchmarks.
At 2:48 p.m., Trump tweeted: "I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business."
The 30-stock Dow was up more than 200 points before the tweet was sent. Both the S&P 500 and the Nasdaq were also higher.
Shares of Boeing dropped 6.8% to lead the Dow lower. Amazon slid 3.1% while Facebook, Netflix, Alphabet, Microsoft and Apple all declined more than 2%.
Airlines were also under pressure as the industry was hinging on additional aid to avoid more layoffs. United Airlines and Delta were down 3.7% and 2.9%, respectively. American slid 4.5% and Southwest pulled back by 2.4%.
"It will now come down to who sweeps and how much stimulus we get and what it looks like under either a Republican or Democratic congress/President," said Dennis DeBusschere, quantitative strategist at Evercore ISI. "For now ... the sweep scenario clearly favors the Dems. That is why unwinding stimulus trades should not be taken too far."
Earlier in the day, Trump participated in a call with House Minority Leader Kevin McCarthy, Senate Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin where they discussed coronavirus relief.
House Speaker Nancy Pelosi, D-Calif., said Trump was putting "himself first at the expense of the country" by calling off the negotiations.
"Walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus, as is required by the Heroes Act. He shows his contempt for science, his disdain for our heroes – in health care, first responders, sanitation, transportation, food workers, teachers, teachers, teachers and others – and he refuses to put money in workers' pockets, unless his name is printed on the check," she added.
Earlier in the day, Federal Reserve Chairman Jerome Powell once again called for additional fiscal aid, saying it is necessary for the economic recovery to continue.
"Even if policy actions ultimately prove to be greater than needed, they will not go to waste," Powell said. "The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods."
Stocks soared on Monday as investors grew more optimistic about President Donald Trump's health and the possibility of additional economic relief. Both the Nasdaq and S&P 500 had their biggest one-day gain since Sept. 9. The Dow posted its best daily performance since July 14. On Tuesday, the White House said Trump reported no symptoms after his first night out of the hospital.
"It is clear that the parts of the economy most directly affected by the pandemic are most in need of additional government support, including small business, state and local governments, airlines, leisure and hospitality workers, and retail," said David Joy, chief market strategist at Ameriprise.
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