Stocks fell sharply on Monday as coronavirus infections jumped and negotiations for a fiscal stimulus package before the election came down to the wire.
The Dow Jones Industrial Average traded 707 points lower, or 2.5% and was on pace for its biggest one-day drop since Sept. 3. The S&P 500 slid 2.1% and the Nasdaq Composite dipped 1.7%.
The decline came amid a record surge in new coronavirus cases in the U.S. The country saw more than 83,000 new infections on both Friday and Saturday after outbreaks in Sun Belt states, surpassing a previous record of roughly 77,300 cases set in July, according to data from Johns Hopkins University. The data also showed the country has reported an average of 68,767 cases per day over the past seven days, a record.
White House chief of staff Mark Meadows said Sunday that the U.S. will not get control of the pandemic amid the surge in new cases.
Optimism also dimmed that the White House and Republicans could strike a stimulus deal with Democrats before the election. Meadows and House Speaker Nancy Pelosi in separate interviews accused each other of moving the goalposts on stimulus talks. White House economic advisor Larry Kudlow also told CNBC’s “Squawk Box” that talks had slowed down, but noted they are still ongoing.
“The market is likely to drift lower near term (first SPX support at 3,209) in the face of Stimulus disappointment … Virus resurgence, and intensifying Election uncertainty,” said Julian Emanuel, strategist at BTIG.
Stocks with the most to lose from rising cases and a stalled stimulus plan led the decline Monday. Royal Caribbean shares fell 9%. Delta fell 4.3%.
SAP, one of the biggest software companies in Europe, saw its shares plunge more than 20% after warning that businesses are holding back from spending; it also cut its earnings and revenue estimates for 2020. Oracle stock was down by 5.2%. Microsoft lost 1.4%.
However, some names that would benefit from people spending more time at home bucked the broader market’s negative trend. Amazon climbed 1% and Zoom Video gained 2.6%.
This week marks the last week of October and the final trading period before Nov. 3. Major averages are on track for modest gains for the month, with the S&P 500 and the Nasdaq both rising more than 3% so far. The 30-stock Dow is up about 2% this month.
“Based on the action in the stock market we’ve seen over the past two weeks, it seems to us that it will take some serious new-news to fuel a significant decline over the next week and a half,” Matt Maley, chief market strategist at Miller Tabak, said in a note on Sunday.
Former Vice President Joe Biden maintains a sizable lead over President Donald Trump in national polls, although the gap has narrowed slightly as of late.
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