WASHINGTON (NEXSTAR) — President Trump said on Tuesday he has instructed his “representatives” to “stop negotiating” with Democrats for a new stimulus package “until after the election.”
In the statement, Trump said he plans to pass a “major stimulus bill” if he is re-elected on Nov. 3.
Trump accused House Speaker Nancy Pelosi of “not negotiating in good faith” and said he is rejecting the offer.
Speaker Pelosi and Treasury Secretary Steven Mnuchin were set to talk again on Tuesday afternoon in hopes of striking a deal.
In a statement, Pelosi said Trump “showed his true colors” by “putting himself first at the expense of the country, with the full complicity of the GOP members of Congress.”
“Walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus,” Pelosi said in the statement.
Stocks turned sharply lower on Wall Street Tuesday afternoon after President Donald Trump ordered a stop to negotiations with Democrats on a coronavirus economic stimulus bill until after the election.
The S&P index slid 1.3% after Trump tweeted his mandate. The benchmark index had been up 0.7% just prior to the president’s announcement with about an hour of trading left.
The comments from the president came just hours after Federal Reserve Chair Jerome Powell urged Congress to come through with more aid, saying that too little support “would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
Trump’s announcement dashes Wall Street’s hopes that another round of stimulus for the economy, which has been punched into a recession by shutdowns related to the coronavirus pandemic, could soon be on the way. Bitter partisanship on Capitol Hill has been preventing a compromise on more aid. Reports on the economy have been mixed recently, as some areas show a slowdown after extra unemployment benefits and other stimulus earlier approved by Congress expired.
Here is the full statement from President Trump:
The Dow Jones Industrial Average was down 359 points, or 1.3%, to 27,785 as of 3:19 p.m. Eastern time. The Nasdaq composite was down 1.4%. Small stocks were holding up better than the rest of the market. The Russell 2000 index of small-cap stocks was up 0.2%.
The market’s slide comes a day after the S&P 500 posted its best day in more than three weeks. Other stock markets around the world made mostly modest gains. Longer-term Treasury yields veered lower after Trump’s remarks. They had earlier been hanging close to their highest levels in months.
“Nancy Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19. We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. I am rejecting their request, and looking to the future of our Country. 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. I have asked Mitch McConnell not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett. Our Economy is doing very well. The Stock Market is at record levels, JOBS and unemployment also coming back in record numbers. We are leading the World in Economic Recovery, and THE BEST IS YET TO COME!”
— President Donald Trump (Twitter)
Full statement from Speaker Pelosi:
“Today, once again, President Trump showed his true colors: putting himself first at the expense of the country, with the full complicity of the GOP Members of Congress. Walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus, as is required by the Heroes Act. He shows his contempt for science, his disdain for our heroes – in health care, first responders, sanitation, transportation, food workers, teachers, teachers, teachers and others – and he refuses to put money in workers’ pockets, unless his name is printed on the check. At the same time, the President is abandoning meeting the needs of our children as they adjust to learning in-person, virtual or hybrid. Instead, Trump is wedded to his $150 billion tax cut for the wealthiest people in America from the CARES Act, while he refuses to give real help to poor children, the unemployed and America’s hard-working families. Clearly, the White House is in complete disarray. Sadly, they are rejecting the urgent warnings of Fed Chairman Powell today, that ‘Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses. Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy and holding back wage growth. By contrast, the risks of overdoing it seem, for now, to be smaller. Even if policy actions ultimately prove to be greater than needed, they will not go to waste.’”
— Speaker Nancy Pelosi
The selling was widespread, led by technology stocks and companies that rely on consumer spending. Utilities were the only gainers among the 11 sectors in the S&P 500.
A report on Tuesday showed that U.S. employers advertised slightly fewer job openings in August than the prior month. But the number was nevertheless better than economists expected.
Trading on Wall Street has gotten even shakier recently as investors contend with a long list of uncertainties, from Trump’s COVID-19 diagnosis to waxing and waning expectations about Congress’ ability to deliver another round of stimulus for the economy.
The S&P 500 jumped 1.8% on Monday after Trump said he’s returning to the White House to complete his recovery from the coronavirus, though his medical team said he’s not yet fully “out of the woods.”
Powell has repeatedly urged Congress to provide additional aid, saying the Fed can’t prop up the economy by itself, even with interest rates at record lows. “The expansion is still far from complete,” Powell said in a speech to the National Association for Business Economics, group of corporate and academic economists.
Several big challenges lie ahead of markets. Chief among them is the still-raging pandemic, as so clearly illustrated by Trump’s stay in the hospital. The worry is that a ramp-up in infections could cause governments to bring back some of the restrictions they put on businesses early this year, which sent the economy hurtling into a recession.
“We’re on the eve of earnings season and people are reasonably undecided as to whether the correction that started in September has further to run,” said Julian Emanuel, BTIG chief equity and derivatives strategist.
The upcoming election also still means a host of uncertainty about tax rates and regulations on businesses, while tensions between the United States and China continue to simmer.
The yield on the 10-year Treasury note fell to 0.75% from 0.78% late Monday. While that’s still very low, the yield has been generally climbing since dropping close to 0.50% in early August.
Stimulus relief for Americans was the first piece of business Trump tweeted about from inside Walter Reed over the weekend. The message from the president underscored the political importance of reaching a bipartisan deal and delivering new direct payments.
“Our great USA wants and needs stimulus,” tweeted Trump. “Work together and get it done.”
That’s exactly what Pelosi and Mnuchin have tried to do over the last week. The pair has had regular meetings lasting more than an hour. The speaker told CBS’ Face the Nation Sunday that she and Mnuchin were “making progress.”
In addition to settling on a financial figure for the package, the GOP and Democratic leadership struggled to settle on the language of the legislation. In particular, Senate Majority Leader Mitch McConnell’s insistence on a liability shield for businesses fearing COVID-related lawsuits after they reopen their doors.
What was never at issue was stimulus checks. Both Pelosi and Mnuchin said direct payments would be part of any approved package.
Talks between Mnuchin and Pelosi had been closely held. As of Tuesday, the two sides remained roughly $600 million apart.
As negotiations dragged out without coming to terms, Pelosi pushed a $2.2 trillion COVID-19 relief bill through the House last week.
A $1.6 trillion White House plan gave ground with a $250 billion proposal on funding for state and local governments. Mnuchin’s offer of a $400 per week jobless benefit put him in the same ballpark as Democrats backing a $600 benefit.
The GOP price tag of $1.6 trillion or more was feared to drive many Republicans away, however, even as it failed to satisfy Pelosi.
Pelosi’s move to pass her larger relief measure in the House was largely symbolic and put lawmakers no closer to actually delivering aid such as more generous weekly unemployment payments, extended help for small businesses and especially troubled economic sectors such as restaurants and airlines, and another round of $1,200 direct payments to most Americans.
The vote was advertised as a way to demonstrate Democrats were making a good faith offer on coronavirus relief, but 18 Democrats abandoned the party and sentiment remains among more moderate Democrats to make more concessions and guarantee an agreement before Election Day.
Republicans controlling the Senate remained divided.
Pelosi was hopeful Trump’s coronavirus diagnosis could help move negotiations forward.
“This kind of changes the dynamic because here,” Pelosi said in an interview Friday with MSNBC. “They see the reality of what we have been saying all along along. This is a vicious virus.”
McConnell expressed support for the talks and another bill but wasn’t leaning into the effort. Some of his members appear worried that the deadlock was harming their reelection bids.
“I’d like to see another rescue package. We’ve been trying for months to get there,” McConnell told reporters last week. “I wish them well.”
The Associated Press contributed to this report.
