US stocks drop lowest in two weeks amid stimulus worries

Data showed key parts of the American economy are slowing two weeks ahead of the vote, while Federal Reserve officials warn the growth will slow without additional federal spending.

US stocks fell to the lowest in almost two weeks as Congress remained apart on a fresh government spending deal, denting hopes for a breakthrough before the election. Treasuries slipped with the dollar.

A Wall Street sign is pictured outside the New York Stock Exchange in the Manhattan borough of New York City, New York. (Reuters)

The S&P 500 Index fell more than 1.5% as opposition to a sizable aid package hardened in the Republican-controlled Senate and House Speaker told her caucus negotiators are still trying to reach a deal. Data showed key parts of the American economy are slowing two weeks ahead of the vote, while Federal Reserve officials warn the growth will slow without additional federal spending.

Futures had advanced overnight on signs of progress toward a deal and the latest data from China showing its economy continues to rebound. The 10-year Treasury yield rose above 0.76% and the dollar weakened versus major peers.

“As the hope for stimulus before the election fades, the market kind of fades with it,” said Christopher Grisanti, chief equity strategist at MAI Capital Management. “The market was pricing in some kind of stimulus and without it there’s disappointment.”

Elsewhere, oil droped before an OPEC+ meeting to assess the state of the market as demand comes under pressure from the threat of new virus restrictions.