US Stocks Resume Downward Slide As Sterling Falls Further

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Wall Street stocks resumed their downward slide Thursday, while the pound dropped further amid a fight between Britain and the European Union on Brexit legislation.

After an early advance that built on Wednesday's winning session, US stocks stumbled, finishing solidly lower.

The pullback came as a trimmed-down US relief package failed to pass the Republican-led Senate. The $500 billion package marked a dramatic reduction from the $3 trillion bill that the Democratic-led House of Representatives passed in May but which was never taken up by the Senate.

"No one was expecting that bill to get very far," but the setback "reflected the burgeoning pessimism surrounding another relief bill."

Among major indices, the tech-rich Nasdaq was again the biggest loser, finishing down 2.0 percent behind declines in Apple, Amazon and other large tech companies.

"Investors are wondering whether the technology sector can continue to deliver for the overall market," said TD Ameritrade's J.J. Kinahan.

Large tech companies have been major beneficiaries during the coronavirus pandemic, propelled by rising demand for digital services, streaming and e-commerce.

But increasingly there are "question marks in peoples' minds about 'the work from home' trade," Kinahan said.

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European equities also pulled back earlier in the day as European Central Bank head Christine Lagarde forecast the eurozone's coronavirus downturn would be less severe than feared.

As major stock markets marked time, Lagarde acknowledged a recent spike in coronavirus cases was causing "headwinds" for the recovery whose pace remained uncertain, but added data pointed to a "strong rebound" in the third quarter.

Grilled by reporters about the euro's rise against the dollar, the ECB chief acknowledged concerns that the currency's upward surge could brake price growth and keep the central bank's inflation target further out of reach.

The issue was "extensively discussed," Lagarde said, adding the ECB was not targeting a euro level.

But she added: "We are monitoring carefully the impact of our currency on our medium-term inflation level."

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The euro gained against both the dollar and the pound, which suffered as Britain's government defied threats from the European Union of legal action over Brexit legislation.

Boris Johnson's government provoked EU ire after it introduced legislation that intentionally breaches its obligations regarding Northern Ireland in the withdrawal treaty.

The move has fanned fears of no trade agreement being reached, dealing a double-whammy to a British economy already ravaged by virus lockdowns.

Traders are awaiting the latest policy meeting of the European Central Bank as the continent sees a spike in new infections Traders are awaiting the latest policy meeting of the European Central Bank as the continent sees a spike in new infections  AFP / Yann Schreiber

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The European Commission warned that Britain "has seriously damaged trust between the EU and the UK," and scorned Downing Street's contention that the bill will preserve the peace in Northern Ireland.

"In fact," the statement said, Brussels "is of the view that it does the opposite."

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New York - Dow: DOWN 1.5 percent at 27,534.58 (close)

New York - S&P 500: DOWN 1.8 percent at 3,339.19 (close)

New York - Nasdaq: DOWN 2.0 percent at 10,919.59 (close)

London - FTSE 100: DOWN 0.2 percent at 6,013.32 (close)

Frankfurt - DAX 30: DOWN 0.2 percent at 13,208.89 (close)

Paris - CAC 40: DOWN 0.4 percent at 5,023.93 (close)

EURO STOXX 50: DOWN 0.4 percent at 3,312.77 (close)

Tokyo - Nikkei 225: UP 0.9 percent at 23,235.47 (close)

Hong Kong - Hang Seng: DOWN 0.6 percent at 24,313.54 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,234.82 (close)

Pound/dollar: DOWN at $1.2805 from $1.3002 at 2100 GMT

Euro/pound: UP at 92.26 pence from 90.78 pence

Euro/dollar: UP at $1.1816 from $1.1803

Dollar/yen: DOWN at 106.13 yen from 106.18 yen

West Texas Intermediate: DOWN 2.0 percent at $37.30 per barrel

Brent North Sea crude: DOWN 1.8 percent at $40.06 per barrel

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