Stocks are off to a wobbly start as hopes for virus aid fade

NEW YORK (AP) — Stocks are wobbling in early trading on Wall Street as hopes for a pre-election economic stimulus package slipped further away and as virus cases continued to increase. The S&P 500 was little changed after the first few minutes of trading Tuesday, while the Dow Jones Insustrial Average fell slightly. Drugmaker Eli Lilly slumped in the early going after reporting earnings that fell well short of what analysts were expecting. The company said it’s still backing a possible treatment for COVID-19 despite research showing that it may not be effective on hospitalized patients. European markets fell and Treasury yields moved lower.

THIS IS A BREAKING NEWS UPDATE: AP’s earlier story appears below.

Shares skidded in Europe and Asia on Tuesday after surging coronavirus cases and waning hopes for U.S. economic stimulus gave Wall Street its worst day in a month.

Stock benchmarks fell in Paris, London, Hong Kong, Sydney and Seoul. Tokyo was flat. Shanghai recovered from early losses to edge higher.

Overnight, the S&P 500 fell 1.9%, deepening its losses from last week. Stocks of companies worst hit by the pandemic logged some of the biggest losses. Cruise lines, airlines and energy stocks tumbled in tandem with crude oil prices.

In another sign of caution, Treasury yields pulled back after touching their highest level since June last week and were steady at 0.80% on Tuesday.

Unease over possible economic disruptions from a resurgence of COVID-19 outbreaks has added to uncertainties with the U.S. presidential vote just one week away.

Doubts are mounting that Washington will come through with more stimulus for the economy before the Nov. 3 Election Day after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin failed to reach an agreement to send cash to most Americans, restart supplemental benefits for laid-off workers and provide aid to schools, among other things.

“There are only eight days left for the U.S. presidential election and there are still no signs of second stimulus package. There is no doubt that investors have become a lot more nervous now than before," Naeem Aslam of Avatrade.com said in a commentary.

Germany's DAX lost 0.3% to 12,136.88 while the CAC 40 in Paris slipped 0.6% to 4,786.86. In Britain, the FTSE 100 gave up 0.% to 5,775.35. U.S. futures were little changed, with the contract for the Dow industrials flat and the S&P 500's up less than 0.1%.

Coronavirus counts are surging in much of the United States and Europe, raising concerns about more damage to still-weakened economies. In Europe, Spain’s government has declared a national state of emergency that includes an overnight curfew, while Italy ordered restaurants and bars to close each day by 6 p.m. and shut down gyms, pools and movie theaters.

The gloom carried into trading in Asia, where Japan’s Nikkei 225 was almost unchanged at 23,485.80. The Hang Seng in Hong Kong slipped 0.5% to 24,787.19. South Korea’s Kospi lost 0.6% to 2,330.01, while the S&P/ASX 200 slumped 1.7% to 6,051.00. The Shanghai Composite index recovered from early losses, edging 0.1% higher to 3,254.32.

India's Sensex advanced 0.5% to 40,352.94.

South Korea reported better than expected 1.9% quarter-on-quarter economic growth in the last quarter, following a 3.2% quarterly decline in April-June. On an annual basis, the economy contracted 1.3%, compared with expectations for a 1.8% decline according to FactSet. Strong exports led the rebound, economists said.

Overnight, the S&P 500 dropped to 3,400.97, while the Dow slumped 2.3%, to 27,685.38. The Nasdaq composite lost 1.6% to 11,358.94. Smaller company stocks also took heavy losses, knocking the Russell 2000 index down 2.2%, to 1,605.21.

The U.S. economy has recovered a bit since stay-at-home restrictions that swept the country earlier this year eased. Economists expect a report on Thursday to show it grew at an annual rate of 30.2% during the summer quarter after shrinking 31.4% during the second quarter.

But momentum has slowed after a round of supplemental unemployment benefits and other stimulus that Congress approved earlier this year expired.

On Tuesday, oil prices steadied, with U.S. benchmark crude gaining 17 cents to $38.73 per barrel in electronic trading on the New York Mercantile Exchange. It skidded $1.29 to $38.56 on Monday. Brent crude, the international standard, picked up 19 cents to $41.00 per barrel.

This week is the busiest of this quarter's earnings season, with more than a third of the companies in the S&P 500 index scheduled to report. Besides Amazon and Apple, Ford Motor, General Electric and Google's parent company, Alphabet, are also on the docket.

Across the S&P 500, profit reports for the summer have been mostly better than Wall Street had feared, though they’re still on pace to be more than 16% lower than year-ago levels.

In currency trading, the dollar bought 104.78 Japanese yen, down from 104.86 late Monday. The euro weakened to $1.1804 from $1.1811.