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Wall Street closes down on soaring virus cases, US stimulus worries

  • Herbert Lash

    Reuters

New York, United States   /   Tue, October 27, 2020   /   08:11 am
Wall Street closes down on soaring virus cases, US stimulus worries Traders wearing masks work on the first day of in person trading since the closure during the outbreak of the COVID-19 on the floor at the New York Stock Exchange (NYSE) in New York, United States, on May 26, 2020. (Reuters/Brendan McDermid)

US stocks tumbled on Monday in thin trade, with the S&P 500 posting its biggest daily decline in four weeks, as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the US economic recovery.

The United States, Russia and France set daily records for coronavirus infections. The number of hospitalized Americans with COVID-19 jumped to a two-month high.

Travel-related stocks, vulnerable to COVID-19 related curbs, fell sharply. The S&P 1500 airlines index fell about 5.6 percent while cruise line operators Carnival Corp fell 8.66 percent and Royal Caribbean Cruises Ltd slid 9.65 percent, the biggest decliner among S&P500 companies.

“Fears about COVID-19 resurgence and the continued failure to reach a fiscal policy package between Republicans and Democrats has investors unnerved,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

“Those are the two biggest drivers of today’s decline.”

The energy index tracked a more than 3 percent fall in oil prices, falling 3.47 percent. The economically sensitive industrials and financials also posted steep declines among S&P sectors.

The big price moves came as trading volume was less than the daily October average.

“From our clients’ perspective, the uncertainty is causing them to stay on the sidelines. So you’re seeing a lack of buyers, generally speaking,” said King Lip, chief strategist at Baker Avenue Asset Management in San Francisco.

US House of Representatives Speaker Nancy Pelosi spoke with Treasury Secretary Steven Mnuchin about COVID-19 relief legislation. She remains optimistic an agreement can be reached before the election, a Pelosi spokesman said.

Wall Street’s fear gauge hit its highest in more than seven weeks as uncertainty grew over the Nov. 3 election. Some 60 million Americans have voted in a record-breaking early turnout as Trump and Democratic challenger Joe Biden entered their final week of campaigning.

The week marks one of the busiest of the third-quarter earnings season that will see results from mega-cap US tech firms including Apple Inc, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc.

The tech sector is among the only three sectors apart from healthcare and consumer staples expected to post an increase in profit from a year earlier.

Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5 percent have beaten Wall Street expectations, according to Refinitiv data.

The Dow Jones Industrial Average fell 650.19 points, or 2.29 percent, to 27,685.38. The S&P 500 lost 64.42 points, or 1.86 percent, to 3,400.97 and the Nasdaq Composite dropped 189.35 points, or 1.64 percent, to 11,358.94.

Volume on US exchanges was 8.72 billion shares, lower than the 20-day average of 8.9 billion shares.

Software company Oracle Corp fell 4.02 percent after German rival SAP abandoned medium-term profitability targets and warned of a longer-than-expected recovery time from the pandemic hit.

Hasbro Inc tumbled 9.35 percent as quarterly adjusted revenue fell due to coronavirus-led delays in production of movies and TV shows.

Companies deemed stay-at-home winners including Amazon.com Inc, Zoom Video Communications Inc and video game companies Activision Blizzard Inc and Take-Two Interactive Software Inc rose, bucking the downtrend.

Declining issues outnumbered advancing ones on the NYSE by a 6.23-to-1 ratio; on Nasdaq, a 4.52-to-1 ratio favored decliners.

The S&P 500 posted four new 52-week highs and two new lows; the Nasdaq Composite recorded 28 new highs and 52 new lows.