Dow plunges 900 points as coronavirus cases keep rising

Shares fell sharply on Wall Street on Monday as a worrying rise in the number of coronavirus cases in the US and Europe threatens the global economy.

On Monday afternoon, the Dow fell more than 900 points, or 3.2%, in the afternoon before the end of the day with a drop of 650 points to 27,685. The S&P 500 stock index closed 1.9% lower, on its way to its worst day in more than a month, while the high-tech Nasdaq compound fell 2.7% .

Shares also fell in much of Europe and Asia. As another precautionary note, Treasury yields were falling again and bond prices were rising, demonstrating that investors are looking for security while markets remain rocky.

Record cases of COVID-19

The coronavirus count is increasing in much of the United States and Europe, which raised concerns about further damage to the still weakened world economy. The United States came very close to setting a consecutive record daily infection rates Friday and Saturday.

“Both the number of single-day cases in the U.S. and the seven-day moving average reached new highs over the weekend, and the third wave of Covid cases continues to widen,” said Ian Shepherdson of Pantheon Macroeconomics to Investors in a Research Note

In Europe, the Spanish government declared a state of national emergency on Sunday that includes a curfew overnight, while Italy ordered restaurants and bars to close every day at 6pm and close gyms, swimming pools. and movie theaters.

Meanwhile, hopes are dashing that lawmakers in Washington, DC, may offer more support to the economy at any time soon. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke several times last week about a possible deal for send cash for most Americans, restart the extra benefits for laid-off workers and provide help to schools, among other things.

• Read: Is this the status of a second $ 1,200 stimulus check?

But there is a deep partisan difference on Capitol Hill, and time is running out for anything to happen before the Nov. 3 presidential election. Any compromise reached between House Democrats and the White House would also face stiff resistance from Republicans who control the Senate.

“The double whammy of a stagnant stimulus bill and new highs in cases is a harsh reminder of the many concerns that still exist,” Ryan Detrick, chief market strategist at LPL Brokerage, said in an email. Financial. “Most of the recent economic data has been strong, but when you see parts of Europe coming back to a standstill, it reminds us that this struggle is still far from over.”

Will more confinements come?

Concerns about declining short-term stimulus prospects helped propel the S&P 500 to a 0.5% drop last week, its first weekly loss in four weeks.

“While we see nations trying to stifle the spread of the virus through more localized and temporary restrictions, it looks very likely that we will eventually see a series of blockages across the country if the trajectory cannot be reversed,” said Joshua Mahony, an analyst. senior market. to the IG Group derivatives trader in London.

“Traders remain broken as they weigh the potential imminent benefits of a US stimulus package and a potential vaccine,” he added.

The U.S. economy has recovered somewhat since the restrictions on staying at home that ravaged the country earlier this year eased, and economists expect a report on Thursday to show that it has grown to an annual rate of 30.2% during the summer quarter. after falling 31.4% during the second quarter.

But the momentum has slowed recently after a previous round of supplementary unemployment benefits and other incentives passed by Congress earlier this year expired.

The actions of companies that need the virus to be reduced and the economy to return to normal were recording some of the strongest losses in the morning trading. Norwegian Cruise Line fell 9.3%, Marathon Oil fell 6.1% and United Airlines lost 6.2%.

Energy stocks experienced the largest share price losses among the 11 sectors that make up the S&P 500, with a joint drop in oil prices. Almost 99% of the shares in the index were lower.

Among the few gains on the market on Monday were companies that can be successful even in a home economy. Zoom Video Communications gained 3.1%. Shares of online retail giant Amazon Inc. they went up slightly.

This coming week is the busiest in the earnings season this quarter, with more than a third of S&P 500 companies scheduled to report. In addition to Amazon and Apple, Ford Motor, General Electric and Google’s parent company, Alphabet, are also on the register.

At the S&P 500, summer earnings reports have been mostly better than Wall Street feared, though they are still about 16 percent lower than a year ago.

Brian Price, head of investment management at the Commonwealth Financial Network, also said markets are trying to assess the risks of a contested presidential election.

“I think investors are pulling some tabs off the table or raising their hedging positions ahead of what could be a faint period for risky assets,” he said in an email.

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