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GLOBAL MARKETS-U.S. stocks take a dive after Trump halts stimulus talks

Tue, 6th Oct 2020 21:23

* Dollar rises, U.S. Treasury yields fall after Trump's
announcement

* Crude extends gains on supply pressures

* President Trump receiving top care for COVID-19 since
release

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(Updates to market close)

By Stephen Culp

NEW YORK, Oct 6 (Reuters) - Wall Street took a nosedive late
in the session on Tuesday, reversing solid gains to close deep
in negative territory after President Donald Trump announced he
was calling off talks on coronavirus relief legislation until
after the Nov. 3 election.

All three major U.S. stock indexes closed more than 1%
lower.

"The markets finally ran out of hope Speaker (Nancy) Pelosi
and (Treasury) Secretary (Steven) Mnuchin would pull a rabbit
out of a hat," said Chris Zaccarelli, chief investment officer
at Independent Advisor Alliance in Charlotte, North Carolina.

Trump's announcement in a tweet came on the heels of U.S.
Federal Reserve Chair Jerome Powell's warning of dire economic
repercussions if Congress failed to pass additional fiscal
stimulus.

"Powell called for Congress to act quickly and Trump
effectively pulled the rug out from under that," said Oliver
Pursche, president of Bronson Meadows Capital Management in
Fairfield, Connecticut. "It's troubling, given the statements
Chairman Powell made earlier today."

In remarks delivered online to the National Association for
Business Economics, Powell warned the U.S. economy could slip
into a downward spiral if the coronavirus is not contained and
Congress fails to deliver additional fiscal support to
businesses and households.

The Dow Jones Industrial Average fell 375.88 points,
or 1.34%, to 27,772.76, the S&P 500 lost 47.68 points, or
1.40%, to 3,360.95, and the Nasdaq Composite dropped
177.88 points, or 1.57%, to 11,154.60.

The pan-European STOXX 600 index rose 0.07% and
MSCI's gauge of stocks across the globe shed
0.75%.

Crude prices extended gains, boosted by supply disruptions
from approaching storms in the Gulf of Mexico and an ongoing oil
worker strike in Norway.

U.S. crude futures settled at $40.67 per barrel, a gain of
3.7%, while Brent gained 3.29% on the day to settle $42.65 per
barrel.

The dollar, essentially flat for much of the session, jumped
against a basket of world currencies after Trump's
tweet.

The dollar index rose 0.21%, with the euro
down 0.27% to $1.1749.

The Japanese yen strengthened 0.14% versus the greenback at
105.62 per dollar, while Sterling was last trading at
$1.2902, down 0.58% on the day.

U.S. Treasury yields dropped from four-month peaks after
Trump's announcement.

Benchmark 10-year notes last rose 5/32 in price
to yield 0.7469%, from 0.762% late on Monday.

The 30-year bond last rose 13/32 in price to
yield 1.5501%, from 1.567% late on Monday.

Gold prices were lower after the safe-haven precious metal
erased earlier gains.

Spot gold dropped 1.4% to $1,886.71 an ounce.

(Reporting by Stephen Culp; additional reporting by Sinead
Carew
Editing by Sonya Hepinstall)

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