Wall Street slumps as Covid cases rise

by Jonathan Adams
Wall Street slumps

The Dow dropped 2.3%, the S&P 500 declined 1.9%, and the Nasdaq was down 1.6%

Wall Street suffered its worst daily decline in weeks today as global stock markets posted losses amid a rise in new Covid-19 infections.

The major US indices were in the red as markets closed this evening, with the S&P 500 posting its sharpest daily fall in four weeks.

Stock futures opened flat to slightly higher Monday evening after a selloff on Wall Street pushed the Dow and S&P 500 to their biggest one-day drops in more than a month.

Contracts on the Dow added 25 points, or 0.09%, shortly after overnight trading kicked off. During the regular trading period, the index dropped 650 points, or 2.3%, for its worst single-session decline since the beginning of September. The S&P 500 fell 1.9% for its worst drop since September 23, and the Nasdaq fell 1.6% for its worst decline in a week.

Airline, cruise line and resort stocks also stabilized in late trading after enduring steep declines earlier in the day, as traders fled from names most exposed to disruptions that could occur if a jump in virus cases further stems discretionary travel.

Concerns over elevated new case counts in the U.S. and abroad contributed heavily to traders’ jitters. In the US, cases hit a record high of more than 80,000 on Friday and held above that threshold again on Saturday. Overseas, the Czech Republic on Monday joined France, Spain and Italy in imposing an evening curfew to try and curb the spread of the coronavirus, with cases again surging across Europe.

The virus resurgence compounded with ongoing uncertainty over the U.S. election results next week and discussions over another significant coronavirus relief package out of Washington.

To the latter point, negotiations took place again between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin Monday afternoon, although the time to pass a bill before Nov. 3 continues to narrow. Pelosi’s spokesperson Drew Hammill said on Twitter after their meeting, “the Speaker remains optimistic that an agreement can be reached before the election,” while adding that “progress depends on Leader [Mitch] McConnell agreeing to bipartisan, comprehensive legislation.”

Some analysts noted that the upbeat comments from lawmakers about the timing of a relief bill has rung hallow to investors in recent days, given that stimulus negotiations have gone on for months now without major progress.

Equity investors proved that talk is cheap when it comes to delivering on additional stimulus as stocks resumed their decline this week on the lack of agreement on a comprehensive stimulus package, said Charlie Ripley, senior investment strategist for Allianz Investment Management. We think the ability to get stimulus done is fading each day as we get closer to the U.S. election, but are reminded that volatility is expected to stay as uncertainties surrounding the path of the virus and the outcome of the election continue to weigh on investors’ minds. With the U.S. election next week, virus cases rising across the globe, and the lack of an agreement on stimulus in Congress, it appears market participants have shifted toward a risk-off tone.

This article is for information purposes only.
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