Dow drops more than 500 points as Trump halts Covid relief negotiations

Market drop-offs underscore how reactive they are to the whims of a president who often sets official administration policy via Twitter

The stock market saw an immediate drop-off on Tuesday after Donald Trump tweeted he was shutting down negotiations on another Covid-19 relief bill between the White House and congressional Democrats.

Within a matter of minutes, the Dow Jones industrial average dropped more than 500 points, from a daily high of over 28,350 to around 27,800.

The S&P 500 fell from a daily high of 3,430 to around 3,360.

Both those figures represent just roughly a 1 per cent drop-off, but they underscore just how volatile the markets are during the coronavirus pandemic, and how reactive they are to the whims of a president who often sets official administration policy via Twitter.

Mr Trump, still recovering from his coronavirus infection, announced on Tuesday he has ordered his team to halt negotiations with congressional Democrats towards another bill intended to provide relief to families and businesses hit hard by the pandemic.

“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 tweeted as he convalesced in the White House residence.

No deal between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin — the chief negotiators on coronavirus legislation over the course of the coronavirus crisis — was in the offing when Mr Trump cemented his position on Tuesday.

Ms Pelosi and Mr Mnuchin had been scheduled for another call for 3.30pm on the East Coast to continue negotiations, but that was scuttled by the president’s announcement.

Several hangups are still preventing a deal, including Republican opposition to Democrats’ plan to shovel hundreds of billions of dollars more to states and local governments, and Democratic opposition to Republican language that would shield businesses, health care facilities, and schools from liability lawsuits related to Covid-19 exposure.

House Democrats have now passed two separate bills worth trillions of dollars since May addressing several of the issues facing Americans during the coronavirus pandemic. Both those bills have languished in the Republican-controlled Senate.

Last month, the Senate GOP tried to vote on a $500bn “skinny” coronavirus relief bill that included another round of $1,200 direct payments to millions of taxpayers, a pared down version of federal unemployment insurance, and liability protections for businesses, health centres and schools.

Senate Democrats filibustered that bill.

John T Bennett contributed to this report