Weighing heavily on the Dow were industrial conglomerate 3M Co, down 4.8%, after it reported a second-quarter plunge in demand across its businesses and McDonald’s Corp, which fell 2.5%, after a surprisingly big drop in global same-store sales.
Data released in the morning showed U.S. consumer confidence ebbed in July as coronavirus infections flared up across the country.
As they waited on a stimulus package agreement and for quarterly reports in one of the busiest weeks in earnings season, investors were also anticipating the U.S. Federal Reserve’s Wednesday wrap-up of its two day policy meeting.
“It’s probably not a bad place to take some profits and rebuild some liquidity because any of those three events could lead to volatility,” said Sameer Samana, Senior Global Market Strategist at Wells Fargo Investment Institute in St. Louis.
Samana said “its going to be very hard for the Fed to surprise on the positive side.”
Meanwhile, Florida reported a record one-day rise in coronavirus deaths, and cases in Texas passed the 400,000 mark, stoking fears the United States was losing control of the outbreak.
Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, called the consumer survey “unsettling” evidence that “individuals are increasingly concerned about the recent surge in coronavirus impacting their finances and their mobility.”
Feeding the fears, members of congress were sparring over a $1 trillion aid proposal from Senate Republicans announced on Monday, four days before millions of Americans lose unemployment benefits.
“There has to be tremendous compromise from both parties to get to some agreement,” Luschini said, noting a congressional recess scheduled for August adds deadline pressure.
“It’s particularly critical at this time since the market is really feeding off the largess that’s been expended by fiscal and monetary authorities,” he said.
The indexes lost further ground late in the session after U.S. Senate Majority Leader Mitch McConnell said no coronavirus bill would be brought to the senate floor without legal liability protections for corporations, a measure opposed by the Democratic majority in the House of Representatives
The Dow Jones Industrial Average fell 205.49 points, or 0.77%, to 26,379.28, the S&P 500 lost 20.97 points, or 0.65%, to 3,218.44 and the Nasdaq Composite dropped 134.18 points, or 1.27%, to 10,402.09.
Materials, energy and consumer discretionary were the biggest percentage decliners of the S&P’s 11 major sectors. Defensive real estate, utilities and consumer staples sectors were the only gainers.
Of the S&P 500 companies that have reported earnings so far this quarter, about 80% surpassed significantly lowered profit forecasts, according to Refinitiv IBES data.
Pfizer Inc shares rose 3.9% after it raised its full-year forecast a day after it announced a pivotal global study to evaluate a COVID-19 vaccine candidate.
Declining issues outnumbered advancing ones on the NYSE by a 1.25-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favored decliners.
The S&P 500 posted 25 new 52-week highs and no new lows; the Nasdaq Composite recorded 56 new highs and 22 new lows.
On U.S. exchanges 9.28 billion shares changed hands compared with the 10.56 billion average for the last 20 sessions.