The S&P 500 and Nasdaq hit their lowest closing levels since late July on tech declines
Stock futures traded mixed Wednesday evening, but were mostly flat line as equity investors took a pause from the heavy selling earlier in the day.
The three major indices renewed September’s selling during the regular session. Another day of heavy tech declines dragged the S&P 500 and Nasdaq to their lowest closing levels since late July. The blue-chip index ended the day 9.6% below its record high from early September to come within striking distance of entering corrective territory, or a pullback of at least 10% from a recent closing high.
Equity investors are digesting a confluence of concerns, including increased uncertainty around the US presidential elections, signs of a growth slowdown, dimming hopes for fiscal stimulus and worsening trends in Covid-19 cases in the US and Europe, even as drugmakers race to develop an effective Covid-19 vaccine. JPMorgan Chase analysts said Tuesday that a contested US election is now their baseline view, given the expected rise in postal voting and President Donald Trump’s baseless but repeated allegations that the voting method is more conducive to fraud.
On stimulus, a number of Federal Reserve officials doubled down on assertions that it remained up to congressional lawmakers to unleash more fiscal stimulus to encourage a continued economic recovery. These remarks were spearheaded by Fed Chair Jerome Powell, who appeared before Congress for a second day of testimony on Wednesday and reiterated that more support was likely to be necessary, even as lawmakers remain at an impasse over how much fiscal stimulus should be unleashed and to whom it should be directed. In separate appearances and media discussions Wednesday, other officials including Cleveland Fed President Loretta Mester and Boston Federal Reserve President Eric Rosengren made similar remarks.
Investors will receive another update on the state of the labour market Thursday morning with the Department of Labor’s weekly initial jobless claims report, which is expected to affirm the slowdown in the economic recovery. New jobless claims are expected to have come in at 840,000 last week, improving modestly from the 860,000 reported during the previous week.
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