Stock Market Today: Trump Pulls the Plug on Stimulus, Stocks

Tuesday's relative market calm was shattered in the afternoon after President Trump called for an abrupt halt to COVID stimulus negotiations.

(Image credit: Getty Images)

The stock market spent most of today dithering between small gains and small losses … that is until Tuesday's late afternoon, when President Donald Trump yanked the emergency brake.

Just a couple days after expressing his support for a COVID stimulus package, Trump tweeted that he was ordering his team to stop negotiations with the House and instead focus on approving his Supreme Court nominee, adding that he would pass "a major Stimulus Bill" if he retained control of the White House in November.

The comments were made not long after Federal Reserve Chairman Jerome Powell, during a speech to the National Association of Business Economics, said the American economy needed more fiscal support.

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"Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses," Powell said.

Trump's tweets immediately sent stocks well into the red. The Dow Jones Industrial Average, which was up by 205 points at one point Tuesday, closed 375 points (or 1.3%) lower to 27,772, with Boeing (BA (opens in new tab), -6.8%) and Apple (AAPL (opens in new tab), -2.9%) among its biggest losers.

Other action in the stock market today:

  • The S&P 500 declined 1.4% to 3,360.
  • The tech-heavy Nasdaq Composite lost 1.6% to finish at 11,154.
  • The small-cap Russell 2000 followed up a strong Monday with relative strength Tuesday, only fading 0.3% to 1,577.

A Clearer Short-Term Obstacle for Stocks

You know how we say the market hates uncertainty? Well, sometimes certainty isn't good either. No stimulus – at least, not for a few months – is crippling news for 12.6 million unemployed Americans, and likely will be a drag on the broader economy.

Experts have warned about the potential stock-market dangers of failed stimulus discussions.

"There are growing concerns that the U.S. recovery may lose steam without further fiscal stimulus," BlackRock Investment Institute strategists opined at the start of the week, adding that they "see U.S. equities vulnerable to fading fiscal stimulus."

It's also a bad omen for hard-hit industries such as airline stocks; names including American Airlines (AAL (opens in new tab), -4.5%) and United Airlines (UAL (opens in new tab), -3.7%) sank shortly after Trump's announcement.

For now, defense remains a high priority – whether that's seeking out safety in bond funds or even raising cash for a clearer investing opportunity.

Investors also would do well to give another look at stocks that do well in recessionary environments. A host of indicators continue to paint a picture of a slowing economy, and a lack of fiscal support from Washington isn't likely to help matters. These 20 stocks, however, have businesses that can succeed even if consumers have fewer dollars to spread around, and boast the balance-sheet integrity to wait out a change in economic fortunes.

Kyle Woodley was long AAPL as of this writing.

Kyle Woodley

Kyle Woodley is the Editor-in-Chief of Young and The Invested (opens in new tab), a site dedicated to improving the personal finances and financial literacy of parents and children. He also writes the weekly The Weekend Tea (opens in new tab) newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.

Kyle was previously the Senior Investing Editor for, and the Managing Editor for before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism. 

You can check out his thoughts on the markets (and more) at @KyleWoodley (opens in new tab).