Conflict over the coming coronavirus stimulus bill in Congress sent stocks lower at the open as Democrats pushed for a more comprehensive measure to ease the pressure on state and local government, as well as those who lost their jobs as a result of the pandemic.
Shortly after the open, the Dow Jones Industrial Average was off 86 points to 26,498 while the S&P 500 fell 6.51 to 3,232 and the Nasdaq dipped 54 points to 10,487.
The Federal Reserve announced it was extending its lending program.
Republicans introduced a number of bills Monday to replace expiring portions of the CARES Act adopted in March to ease the financial impact of shutdowns across the country that sent millions of people to unemployment lines and strained business and government resources.
GOP lawmakers want to reduce the size of the weekly coronavirus benefit from $600 to $200 and limit unemployment compensation to 70% of what an individual was earning before the layoffs hit. Experts say implementing such a system would take months. The Republican plan also calls for more money for coronavirus testing and funds for small businesses. Democrats called the proposals inadequate.
“This week, the market focus will be solely on the negotiations between the Republicans and the Democrats,” Wei Li, head of iShares EMEA investment strategy at BlackRock, told the Wall Street Journal. “We’re talking about a really tight timeline for them to come through with something.”
Goldman Sachs advised investors to keep buying gold as speculation rose the Fed could shift toward an “inflationary bias” as coronavirus relief measures swell the federal deficit and debt.
“Real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” Goldman strategists warned. “Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows.”
Gold was flat at $1,931 while silver dipped to $23.965 an ounce.
Investors also focused on company guidance for the second half of the year as businesses assess the prospects for a comeback from the coronavirus shutdowns.
Pfizer (PFE) shares rose 2.3% as results beat expectations and it raised its outlook for the rest of the year on a deal with the U.S. government for 100 million doses of a coronavirus vaccine candidate it developed with BioNTech.
3M (MMM) shares fell 4% on missed expectations while defense contractor Raytheon (RTX) off more than 1% despite besting analyst predictions.
On foreign markets:
Stocks closed mixed in Asia. Hong Kong’s Hang Seng rose 0.69% while Japan’s Nikkei was off 0.26% and the Shanghai composite gained 0.71%. Australia’s S&P/ASX fell 0.39%.
In early afternoon trading in Europe, London’s FTSE inched up 0.06% while the German DAX was off 0.15% and the French CAC fell 0.49%. The Stoxx 600 added 0.02%.
On currency markets the euro was up 0.2% against the dollar at $1.1729 while the yen fell 0.24% to 105.13 and the British pound rose 0.12% to $1.2895. The U.S. dollar index was up 0.05%.
Crude oil futures were off 0.91% to $41.22 a barrel while Brent crude dipped 0.29% to $43.78.