A warning from Federal Reserve Chairman Powell about the sluggish economic recovery in the US clouded sentiment on Wall Street. With a tweet, US President Trump lets hope for a new Corona aid package dwindle – the indices are finally turning strongly into the red.
Wall Street has turned into the red after US President Donald Trump canceled negotiations on a new corona aid package. Of the Dow Jones Index the defaults closed with minus 1.3 percent at 27,773 points. The broader one S&P 500 fell 1.4 percent to 3360 points. The index of the technology exchange Nasdaq 100 decreased by 1.9 percent to 11,291 points.
Trump had declared the negotiations with the opposition Democrats for a new Corona aid package to have failed for the time being. Trump wrote on Twitter that he had instructed his negotiators to suspend talks until the November 3rd presidential election. His side proposed a package worth $ 1.6 trillion. But the Democrats had insisted on 2.4 trillion, he claimed.
Earlier, the US Federal Reserve Chairman Jerome Powell's warning of a sluggish economic recovery after the coronavirus pandemic had already caused a bad mood on Wall Street. Powell still sees the domestic economy as vulnerable to serious setbacks. If the virus is not effectively contained, the economy could enter a downward spiral, he said. Businesses and households needed more support.
The yield on US Treasuries rose amid the gloomier economic outlook and rose to its highest level in four months. Bank stocks benefited from this: the corresponding index gained 1.2 percent. Up to 6.2 percent it went for the shares of the Mainz vaccine developer Biontech. The European pharmaceutical regulator EMA has initiated the approval process for the corona vaccine developed together with Pfizer. The studies are now to be evaluated as part of the "Rolling Review", although a large study with tens of thousands of participants is still ongoing. This can accelerate the approval of the vaccine that is so much desired in the pandemic.
Tech stocks such as Amazon, Apple, Facebook and the Google parent Alphabet with a Minus of up to 2.8 percent. News played a role that a report by the House of Representatives Antitrust Committee contained a "covert call to split up" the companies. "When you are in a bubble with high volatility, the market is very much influenced by sentiment," said Matt Hanna, portfolio manager at Summit Global Investments. "The mood has changed a bit, it is no longer as optimistic as it was a few months ago."
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