By Geoffrey Smith
Investing.com -- U.S. stock markets opened lower on Tuesday as investors turned cautious ahead of what's likely to be a tense few days of negotiations over the next round of measures to support the U.S. economy through the Covid-19 pandemic.
By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was down 93 points, or 0.4%, at 26,492 points. The S&P 500 was down 0.2% and the Nasdaq Composite was down 0.4%.
Senate Republicans outlined their proposals on Monday, with a sticker price of around $1 trillion. That leaves a big gap to bridge with the $3.5 trillion package of measures that has already passed the Democrat-controlled House of Representatives. Two of the thorniest differences between the plans are the Republicans' intention to cut the current enhancement of unemployment benefits by two-thirds from the start of October, and the Democrats' insistence of $900 billion of funds for state and municipal governments.
Analysts warned that the proposed cuts could hit consumer spending, which accounts for the bulk of the U.S. economy, in more than one way. "Obviously, those out of work will experience a fall in income," said Paul Donovan, chief economist with UBS Global Wealth Management, in a morning briefing. "Those in work may experience an increase in fear of the consequences of unemployment. If fear does increase, the $1,200 (that is currently being distributed) would likely be saved rather than spent.
The major indexes suffered from a slew of mostly underwhelming earnings releases, notably from McDonald's (NYSE:MCD) and industrial giant 3M Company (NYSE:MMM), although the majority still managed to engineer the usual positive earnings surprise. McDonald's stock fell 1.4%, while 3M stock fell 4.5%. However, JetBlue stock pared early losses to be up 0.7%, despite the airline reporting a wider-than-expected loss and giving a downbeat outlook for the rest of the year.
Confidence remained the watchword after the Conference Board's consumer confidence index fell by more than expected in July, dropping to 92.6 from 98.3 in June.
One of the most prominent gainers was Pfizer (NYSE:PFE) stock, which rose 2.0% after the pharma giant said its second-quarter earnings fell by less than expected in the three months through June, despite the fact that the pandemic had stopped its sales force from visiting healthcare professionals, and had also delayed demand for many of its medicines by disrupting hospital schedules.
Pfizer and its German partner BioNTech on Monday announced the start of a hybride phase 2/3 clinical test of their candidate vaccine for treating Covid-19. Moderna also announced the start of a phase 3 trial for its drug. Phase 3 tests are typically the last before a company seeks regulatory approval for a drug.
BioNTech (NASDAQ:BNTX) stock rose 0.7% while Moderna (NASDAQ:MRNA) stock rose 3.7%.