Updated at 4:26 p.m. ET
Stock prices fell after President Trump revealed he had tested positive for the coronavirus, but recovered somewhat on hopes Congress would clinch a deal for a new round of stimulus.
The Dow Jones Industrial Average fell 134 points, or nearly 0.5%. The S&P 500 finished almost 1% lower, while the Nasdaq composite index lost 2.2%.
The declines followed news of Trump's positive test result, which came on the same day that the Labor Department's monthly snapshot showed the U.S. economy created fewer jobs than expected in September.
The two developments on Friday exacerbated concerns about the pace of an economic recovery at a time when Congress has yet to agree on a new stimulus deal.
The Dow was down more than 300 points early in the day, but pared some of its losses after House Speaker Nancy Pelosi expressed hope of reaching a compromise in Congress for additional relief from the coronavirus pandemic.
"If nothing else, the stock market is at some risk of heightened volatility in the coming days and weeks. We were already expecting that with the approach of Election Day. No doubt this may exacerbate that risk, amid no shortage of other sources of uncertainty and volatility," said Mark Hamrick, senior economic analyst for Bankrate.
The White House said the president is displaying "mild symptoms" of the coronavirus and would be staying at home along with the first lady, who also tested positive. The test result comes just weeks ahead of the Nov. 3 election.
Meanwhile, the Labor Department said the economy added 661,000 jobs in September, fewer than economists had expected, in a sign that the economic rebound may be slowing.
The report "provides additional credence to the view that the economic recovery is losing some momentum," said Seema Shah, chief strategist at Principal Global Investors.
"Of course, after having lost over 22 million jobs in the space of March and April, the U.S. labor market has made huge gains over recent months. Yet those gains only equate to around half of those pandemic job losses having been retraced," Shah added.
Stock prices partially recovered early Friday afternoon after Pelosi told MSNBC that Trump's positive test results could jump-start the stalled talks in Congress over a new coronavirus stimulus bill.
"This kind of changes the dynamic because here [Republicans] see the reality of what we have been saying all along. This is a vicious virus," she told MSNBC.
Separately, Pelosi called on new relief for airlines, which have started furloughing workers after a previous aid package from Congress expired.
Earlier relief payments, including additional unemployment benefits for millions of Americans, helped cushion the financial fallout from the pandemic, but much of that aid has now expired.
A report from the Commerce Department on Thursday showed that personal income fell in August. Modest wage gains were more than offset by a deep drop in unemployment benefits.
The president's positive coronavirus test is the latest twist in what has been a pandemic-related roller coaster for financial markets.
Stocks fell sharply in the spring as the virus spread around the globe. But U.S. markets then mounted a remarkable comeback. Thanks to a surge in Big Tech shares, both the S&P 500 and the Nasdaq indexes hit new highs in early September.
DAVID GREENE, HOST:
Investors are reacting to the uncertainty over President Trump and the first lady's coronavirus test results. The stock market opened lower this morning, and overseas markets also fell after the president tweeted the news overnight. All this comes as Congress has failed to pass another round of coronavirus relief aid. And a new jobs report out this morning shows a recovery that may be losing steam. Let's turn to NPR's chief economics correspondent, Scott Horsley. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, David.
GREENE: Let's start with the financial markets. How have they been reacting to the president's positive test result?
HORSLEY: Markets are down but not dramatically so. The Dow dropped about 300 points in the first few minutes of trading this morning. That's just over 1%. European markets were also lower. A lot of the Asian markets were closed for a holiday today, but the Nikkei index in Japan dropped less than 1%. We've seen bigger moves in recent days as investors try to game out prospects for another round of coronavirus relief here in Washington. So, you know, certainly this is another wild card, one more wild card, as we approach the November election. And uncertainty can add to market volatility, but the reaction in the market so far has been fairly muted.
GREENE: I mean, we're getting pretty close to that November Election Day. And we have a new jobs report out this morning from the government, and, I mean, this is the last one before the election, right?
HORSLEY: That's right. And it's not a great one. The U.S. is still adding jobs but at a much slower pace. Employers added just 661,000 jobs in September. That's less than half the number of jobs they added the month before and now we've seen three straight months of declining job growth. And we've only recovered about half of the 22 million jobs that were lost back in March and April. Now, there was an encouraging sign. The unemployment rate fell in September to 7.9%. That sounds pretty good. Unfortunately, behind that headline, the drop was mostly because people got discouraged and dropped out of the labor market. Some businesses are still hiring. Restaurants and retailers continued to add jobs in September; so did professional services. But we saw pretty big job cuts in education by state and local governments, which is an ominous sign. Also some of those temporary census workers who were hired in August were let go in September as the head count nears its completion.
GREENE: All right. So we talk markets. We talk unemployment and jobs numbers. What if we zoom out and just talk about the broader economy? How is it faring, and how has it gotten through this pandemic if we were to take a look right now?
HORSLEY: Some parts the economy are doing OK. Homebuilding, for example, has been booming thanks to high demand for houses and super low interest rates. But overall, we are seeing an economic rebound that is losing some of its bounce. Personal income fell in August largely because of a big drop in unemployment benefits after that $600 a week that Congress had authorized early in the pandemic expired at the end of July. Spending on goods has mostly - has basically recovered to its pre-pandemic levels. But spending on services has not. And, you know, there's a concern that the relief payments that have been cushioning the fallout have been - have largely expired now and there's no replacement in sight. What's more, there is a fear of a resurgence of the virus itself as colder weather comes. And news from the White House about the president's diagnosis is just going to add to that.
GREENE: NPR chief economics correspondent Scott Horsley. Scott, thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.