Wall St. falls after historic GDP slump, Trump suggests election delay

(Reuters) – Wall Street fell on Thursday following a historic contraction in second-quarter GDP and a tweet by President Donald Trump floating the possibility of delaying the U.S. November presidential elections.

Trump, without evidence, repeated his claims of mail-in voter fraud and raised the question of a delay, despite the election date being enshrined in the U.S. Constitution.

Earlier in the day, official data showed the U.S. economy suffered its steepest contraction since the Great Depression in the second quarter, as business activity came to an abrupt halt on efforts to slow the virus outbreak.

Jobless claims numbers also showed another rise in the latest week, adding to signs the momentum of economic recovery has slowed, especially in southern and western U.S. states.

“The short-term data indicates we’re kind of flattening out a little bit, which indicates the recovery is much less a ‘V’ and a little bit more a ‘square root sign’ at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“The markets are taking a breather here and assessing what the next six months look like. We’ve got plenty of stuff on our plate from China to the elections, the virus to reopening schools.”

The U.S. Federal Reserve on Wednesday acknowledged the surge in cases was likely stalling recovery, while pledging to support the economy as long as necessary, giving a boost to Wall Street’s three main indexes late in the session.

All S&P sectors were in the red on Thursday, led by declines in economically sensitive sectors — financials .SPSY, energy .SPNY and materials .SPLRCM.

At 10:00 a.m. ET, the Dow Jones Industrial Average .DJI was down 527.37 points, or 1.99%, at 26,012.20, the S&P 500 .SPX was down 51.63 points, or 1.58%, at 3,206.81. The Nasdaq Composite .IXIC was down 115.47 points, or 1.10%, at 10,427.48.

Qualcomm Inc (QCOM.O), United Parcel Service Inc (UPS.N), and Procter & Gamble Co (PG.N) rose following quarterly results, with Johnson & Johnson (JNJ.N) up slightly as it started human safety trials for its COVID-19 vaccine.

Corporate earnings have tended to be better than expectations so far, but the scale of the economic damage from the pandemic, and the likelihood it will drag on are weighing on investors’ minds.

The White House and Congress are still at loggerheads over a coronavirus relief plan, ahead of the lapse of the enhanced $600-per-week unemployment benefits on Friday.

Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O), Alphabet Inc (GOOGL.O) and Facebook Inc (FB.O) will report earnings later on Thursday, with some on Wall Street questioning their valuations after this year’s gains.

Shares of the companies, which have a combined market value of about $5 trillion, fell between 0.5% and 1.2%.

Declining issues outnumbered advancers for a 5.99-to-1 ratio on the NYSE and a 3.56-to-1 ratio on the Nasdaq.

The S&P index recorded 15 new 52-week highs and no new low, while the Nasdaq recorded 35 new highs and 18 new lows.

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