Wall Street took a nosedive late in the session on Tuesday, reversing solid gains to close deep in negative territory after US President Donald Trump announced he was calling off talks on coronavirus relief legislation until after the November 3 election.

All three major US stock indexes closed more than 1 per cent lower.

“The markets finally ran out of hope Speaker (Nancy) Pelosi and (Treasury) Secretary (Steven) Mnuchin would pull a rabbit out of a hat,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Trump's announcement in a tweet came on the heels of US Federal Reserve Chair Jerome Powell's warning of dire economic repercussions if Congress failed to pass additional fiscal stimulus.

“Powell called for Congress to act quickly and Trump effectively pulled the rug out from under that,” said Oliver Pursche, president of Bronson Meadows Capital Management in Fairfield, Connecticut. “It's troubling, given the statements Chairman Powell made earlier today.”

In remarks delivered online to the National Association for Business Economics, Powell warned the US economy could slip into a downward spiral if the coronavirus is not contained and Congress fails to deliver additional fiscal support to businesses and households.

The Dow Jones Industrial Average fell 375.88 points, or 1.34 per cent, to 27,772.76, the S&P 500 lost 47.68 points, or 1.40 per cent, to 3,360.95, and the Nasdaq Composite dropped 177.88 points, or 1.57 per cent, to 11,154.60.

The pan-European STOXX 600 index rose 0.07 per cent and MSCI's gauge of stocks across the globe shed 0.75 per cent.

Crude prices extended gains, boosted by supply disruptions from approaching storms in the Gulf of Mexico and an ongoing oil worker strike in Norway.

US crude futures settled at $40.67 per barrel, a gain of 3.7 per cent, while Brent gained 3.29 per cent on the day to settle $42.65 per barrel.

The dollar, essentially flat for much of the session, jumped against a basket of world currencies after Trump's tweet.

The dollar index rose 0.21 per cent, with the euro down 0.27 per cent to $1.1749.

The Japanese yen strengthened 0.14 per cent versus the greenback at 105.62 per dollar, while Sterling was last trading at $1.2902, down 0.58 per cent on the day.

US Treasury yields dropped from four-month peaks after Trump's announcement.

Benchmark 10-year notes last rose 5/32 in price to yield 0.7469 per cent, from 0.762 per cent late on Monday.

The 30-year bond last rose 13/32 in price to yield 1.5501 per cent, from 1.567 per cent late on Monday.

Gold prices were lower after the safe-haven precious metal erased earlier gains.

Spot gold dropped 1.4 per cent to $1,886.71 an ounce.

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