Dow Plummets 376 Points as Trump Halts Stimulus Talks Until After Election "I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill," Trump tweeted Tuesday afternoon.

By Ben Winck

entrepreneur daily

This story originally appeared on Business Insider

J. Scott Applewhite | AP Photo via Business Insider

U.S. stocks tanked on Tuesday afternoon, erasing earlier gains, after President Donald Trump said stimulus negotiations in Congress will be frozen until after the presidential election.

The Dow Jones industrial average plummeted as much as 1.5 percent - or 421 points - immediately after the announcement. The benchmark index had risen 0.7 percent at intraday highs prior to the tweet.

Major stock indexes had climbed in recent sessions amid investor optimism around a near-term relief bill. The abrupt pause leaves the U.S. economy to recover without fiscal support many have deemed essential for fueling a timely bounce-back.

"I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business," the president said in a tweet.

With many expecting election results to trickle in over a matter of days, the holdout could last well into next month.

The abrupt halt to relief talks come after House Democrats passed their own $2.2 trillion measure on Thursday. Though the bill garnered no Republican support, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have held multiple conversations in recent days aiming to reach a compromise.

Federal Reserve Chair Jerome Powell warned just hours before the tweet of the risks linked to passing too little relief.

Related: When Will My Next Stimulus Check Arrive? (Updated)

An inadequate fiscal stimulus could give way to a "weak recovery" and create "unnecessary hardship for households and businesses," the central bank chief said in a Tuesday keynote speech to the National Association for Business Economics. Conversely, the "risks of overdoing it seem, for now, to be smaller," as extraneous stimulus funds would still be put to use.

"The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods," Powell added.

The market's rapid reaction wiped modest intraday gains. Consumer discretionary, communication services, and tech stocks sank the most, while utilities — generally viewed as a defensive play — were the only group to finish higher.

So-called reopening plays including airlines, hotels and casinos tanked as investors put off hopes for government support. Airlines have warned they will lay off tens of thousands of workers should Congress fail to allocate emergency funds for the struggling industry.

On the economic data front, the U.S. trade deficit widened to its largest since 2006 amid a leap in consumer goods imports. President Trump has repeatedly cited the sum as a gauge of his trade policies' success. Though the deficit trended lower in 2019, the pandemic quickly erased gains and drove the shortfall higher amid weakened export activity.

Shares of Social Capital Hedosophia Holdings Corp. III slid after the special-purpose acquisition company, or SPAC, announced a merger with Clover Health. The deal values Clover Health at $3.7 billion. The plunge comes in stark contrast with Socia Capital Hedosophia's last target announcement. When the firm revealed its second SPAC would merge with Opendoor, the blank-check company's stock launched higher.

Spot gold sank to $1,885.61 per ounce at intraday lows. The tumble erased the recently retaken support of $1,900. The U.S. dollar climbed, and Treasury yields fell.

Oil prices continued to rally after Monday saw futures leaped the most since May. West Texas Intermediate crude rose as much as 4.2 percent, to $40.86 per barrel. Brent crude, oil's international benchmark, jumped 3.8 percent, to $42.84 per barrel, at intraday highs.

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