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Stocks plunge after Trump orders end to coronavirus stimulus talks

Stocks dropped sharply Tuesday after President TrumpDonald John TrumpBiden holds massive cash advantage over Trump ahead of Election Day Tax records show Trump maintains a Chinese bank account: NYT Trump plays video of Biden, Harris talking about fracking at Pennsylvania rally MORE announced an end to negotiations over another coronavirus relief bill until after the election.

All three major stock indexes lost solid gains from earlier in the day and fell into negative territory after Trump said in a series of tweets that White House aides will no longer discuss a fiscal support deal with Democrats, dashing hopes of a breakthrough before Election Day.

"I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business," Trump tweeted.

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The Dow Jones Industrial Average closed with a loss of 375 points, roughly 1.3 percent, following Trump’s announcement at 3 p.m. Tuesday. The S&P 500 closed with a loss of 1.4 percent, and the Nasdaq composite closed down roughly 1.6 percent. 

Trump’s decision to end talks came despite apparent progress made over the past two weeks during discussions between Speaker Nancy PelosiNancy PelosiOn The Money: McConnell says he would give Trump-backed coronavirus deal a Senate vote | Pelosi, Mnuchin see progress, but no breakthrough | Trump, House lawyers return to court in fight over financial records Progress, but no breakthrough, on coronavirus relief McConnell says he would give Trump-backed coronavirus deal a vote in Senate MORE (D-Calif.) and Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: McConnell says he would give Trump-backed coronavirus deal a Senate vote | Pelosi, Mnuchin see progress, but no breakthrough | Trump, House lawyers return to court in fight over financial records Progress, but no breakthrough, on coronavirus relief McConnell says he would give Trump-backed coronavirus deal a vote in Senate MORE, who has long been Trump’s top dealmaker with the Democratic-controlled House.

With less than five weeks until the election, both Democrats and Republicans were eyeing a deal to issue another round of direct aid check to households, bolster unemployment benefits in some form, revive the Paycheck Protection Program and repurpose previously approved money into further relief for struggling businesses.

Trump's announcement caused the stock market, his preferred gauge of economic success, to close with notable losses. But the long-run impact of his decision and the broader failure to strike a deal could leave millions of Americans in financial peril amid a health crisis with no end in sight.

Roughly 26 million Americans are on some form of unemployment insurance and have suffered for months from the July 31 expiration of a boost to those benefits. Many of the first Americans who lost their jobs to the pandemic will see their benefits expire within months and may struggle to find jobs as entire sectors of the economy remain largely shutdown.

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Thousands of small businesses are also teetering on the brink of failure as the prospect of spiking coronavirus cases this winter and fewer ways move operations to outdoors make for an uncertain future.

And millions of Americans who are struggling to pay rent could face homelessness despite a federal ban on evictions and several foreclosure moratoria that have been difficult to enforce. 

Top economists, including Federal Reserve Board Chairman Jerome Powell, have warned that further fiscal aid is crucial to prevent the slowing recovery from the coronavirus recession from fading.

“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses. Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy and holding back wage growth,” Powell said in a Tuesday speech.

“A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy. That would be tragic, especially in light of our country's progress on these issues in the years leading up to the pandemic,” he continued. 

Updated at 4:26 p.m.