US stocks mixed: Investors fret fallout of growing COVID-19 cases

Wall Street’s main stock indexes were mostly unchanged on Tuesday as surging COVID-19 cases in the United States, intensifying restrictions and Washington’s failure to pass a stimulus bill weighed on investor sentiment with exactly one week until the US elections.

The Dow Jones Industrial Average was hovering near the flat line in late morning trading in New York, down over 75 points or 0.27 percent at 27,609.85.

The S&P 500 – a gauge for the health of US retirement and college savings reports – was unchanged, while the tech-heavy Nasdaq Composite Index was  0.62 to the plus side.

The S&P 500 on Monday had its worst day in a month while the Dow fell by more than 800 points at one juncture in the session as investors faced some tough facts.

For months, Democrats and Republicans have been playing the blame game over stalled talks for a new round of coronavirus relief aid. As the deadlock shows no signs of breaking, millions of out-of-work Americans are facing a tough job market and the possibility of more shutdowns as they struggle to keep food on their tables and roofs over their heads.

Talks are reportedly still ongoing between Treasury Secretary Steven Mnuchin and Democratic Speaker of the House of Representatives Nancy Pelosi. But hopes of a deal being passed before the November 3 election are all but dead.

Meanwhile, the economic recovery could be imperilled by the current spike in COVID-19 infections. Cases in Europe have surged, mounting in Italy, Spain and the United Kingdom and ushering in renewed restrictions, curfews and partial lockdowns.

Protests against the lockdowns have turned violent in Italy.

US President Donald Trump continues to insist that the reason for the surge in documented US cases is because the US is conducting millions of tests.

On Twitter on Tuesday morning, Trump suggested the media was overhyping the surge in cases ahead of the election and said the US is “rounding the turn” on the virus.

Some 60 million Americans have already cast their ballots for the man they think is best suited to lead them out of the gravest economic disaster since the Great Depression of the 1920s and 1930s.

Trump’s Democratic rival Joe Biden is leading in the national polls, but the race has been tightening in key battleground states which, as was the case in 2016, are likely to determine the election’s outcome.

Growing uncertainty over the election’s outcome continues to fuel volatility on Wall Street – and is likely to increase if there is no clear winner next Tuesday and if determining the results is a process that gets dragged on for weeks or even months.

Pedestrians wearing protective masks walk through the Chinatown neighbourhood of New York City in the United States, where businesses are struggling to stay open [File: Nina Westervelt/Bloomberg]

On the economic front, there is some good news as orders for durable goods – items such as washing machines and aircraft that are meant to last three years or more – jumped 1.9 percent in September after rising only 0.4 percent in August. The increase was driven by a 4.1 percent rebound in orders for transportation equipment. Orders for motor vehicles and parts gained 1.5 percent in September after dipping 4.1 percent in August.

imageDurable goods are seen on sale in a store in Los Angeles, California, the United States [File: Lucy Nicholson/ Reuters]

Among stocks making headlines on Tuesday:

Shares of semiconductor designer Advanced Micro Devices were down 2.57 percent in late morning trading on news that the company has agreed to buy competitor Xilinx in a $35bn all-stock deal that is sure to intensify its battle with Intel Corp in the data centre chip market.

Xilinx shares were up more than 10 percent in late morning trading.

Shares of Microsoft were up more than one percent. The tech giant is set to report earnings after Tuesday’s closing bell.

Tech titans Apple, Amazon, Google-parent Alphabet and Facebook, whose shares gained handsomely in the spring and early summer, also report their results later this week.

Big pharma is moving on earning results. Shares of Merck & Co were up 0.06 percent after it raised its full-year earnings forecast.

Shares of Pfizer were down 0.94 after the company reported a drop in third-quarter sales. Pfizer also said it is not yet ready to release data from the late-stage trial of the COVID-19 vaccine candidate that it is developing with Germany’s BioNTech SE.

Shares of Eli Lilly and Co were down 5.61 percent after the drug giant reported that its quarterly profit took a hit from the spike in costs to develop a coronavirus treatment.

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