NEW YORK: Wall Street lost ground on Tuesday, with halted COVID-19 vaccine trials and an elusive U.S. stimulus agreement weighing on sentiment as third quarter earnings season got underway.
While all three major stock indexes closed in the red, a gain Microsoft Corp shares helped the mitigate the tech-heavy Nasdaq‘s loss.
Johnson & Johnson announced on Monday it was pausing clinical trials of a COVID-19 vaccine candidate due to an unexplained illness in a study participant. The delay weighed on the company’s shares, even after its beat-and-raise earnings report. Its shares lost 2.3%.
Late in the session, rival Eli Lilly & Co said it was also halting its coronavirus antibody trial because of safety concerns, sending its shares down 2.9%.
“We have this recent spike in coronavirus cases coinciding with big drug companies halting vaccine trials,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York. “That’s making the market nervous and in response, you’re seeing the lockdown stocks moving higher.”
Hopes for the passage of a new coronavirus relief package faded as U.S. House Speaker Nancy Pelosi rejected the $1.8 trillion coronavirus relief proposal from the White House, saying it “falls significantly short of what this pandemic and deep recession demand.”
Senate Majority Leader Mitch McConnell said the Republican-led Senate would vote on a targeted pared-down stimulus package on Monday.
“(Washington is) playing with the market’s emotions and individuals’ financial futures,” SlateStone Wealth’s Pavlik added. “As this continues, the market is looking past what they’re saying because it truly believes stimulus will come some time after the election.”
Although JPMorgan handily beat consensus profit estimates, gaining from a boom in its trading business, its peer Citigroup, while also beating expectations, was slammed by low interest rates and a slowdown in loan demand. Their shares dropped 1.6% and 4.8%, respectively.
The broader S&P Banking index lost