Stocks fell slightly on Wednesday as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continued their negotiations on a new fiscal stimulus package.
The Dow Jones Industrial Average slipped 97.97 points, or 0.4%, to 28,210.82. Earlier in the day, the 30-stock average traded more than 100 points higher. The S&P 500 dipped 0.2% to 3,435.56 and the Nasdaq Composite slid 0.3% to close at 11,484.69.
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Pelosi said in an MSNBC interview on Wednesday she hoped both sides can resolve the "appropriations piece" of the coronavirus aid bill later in the day.
Her comments came after White House chief of staff Mark Meadows said Tuesday that Pelosi and Mnuchin have made "good progress" on stimulus talks. He added, however, that they "still have a ways to go" before an agreement is reached.
"The market appears to be fixated on what will likely amount to be dead-end pre-election stimulus talks," said Yousef Abbasi, global market strategist at StoneX. "Republican Senators have already pushed back on any proposal that is larger than their 'skinny deal' and every indication is that pre-election stimulus continues to be a very long shot."
Mnuchin and Pelosi's conversation Tuesday continued a last-minute attempt to hash out an agreement before the Nov. 3 election. Democrats and the Trump administration have struggled for months to overcome fundamental disagreements over additional stimulus measures — including the dollar amount — as the economy continues to feel the burden of the coronavirus pandemic.
Goldman Sachs economist Alec Phillips noted that "the biggest issues remain unresolved and a deal doesn't seem particularly close."
"With big differences and little time, it seems unlikely that Pelosi and Mnuchin will reach a deal before the election. More importantly, even if a deal in principle is announced in coming days — this seems possible, but not likely — it looks very unlikely that it would pass before Election Day," he added.
Even if the White House and Democrats hatch a deal, Senate Majority Leader Mitch McConnell would need to bring the bill to the Senate floor in time. McConnell told his caucus Tuesday in a private lunch that he is encouraging the administration not to agree to a stimulus bill as he worries about dividing Republicans on major legislation days before an election, NBC News reported.
"The back and forth political discussions on the stimulus deal and continued election uncertainty give us extra justification for short-term market uneasiness," said David Bahnsen, chief investment strategist at The Bahnsen Group, which oversees $2.5 billion in client assets. "Very few market actors actually doubt that some fiscal relief bill is coming. The question is purely when, and of what composition," he added.
Netflix shares fell nearly 7% after the company reported disappointing earnings and reported fewer-than-expected subscriber additions. Goldman Sachs and Boeing were the worst-performing Dow members, falling 2.5% and 2%, respectively.
Those declines were somewhat mitigated by a 28.3% jump in Snap shares. The social media company's stock rallied on the back of on stronger-than-expected results for the previous quarter. Snap's surge pushed the stock to an all-time high and lifted Facebook, Twitter and Alphabet. Facebook closed 4.2% higher and Twitter gained 8.4%. Alphabet shares advanced 2.3%. A Deutsche Bank analyst said in a note that Snap's results implied a "bonanza for online advertising."
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