Dow Plunges 600 Points On Third Day Of Losses As Market Panics Over Covid Resurgence
Just six days before the November election, the market is in a panic over surging coronavirus cases in the United States and Europe, as France eyes a full-on four-week lockdown that could foreshadow similar restrictions in the U.S.
At 10 a.m. EDT, the Dow Jones Industrial Average was down roughly 600 points, or 2.2%—reaching its lowest level in more than one month, with all 30 components down Wednesday, while the S&P 500 also fell 2.2% and the tech-heavy Nasdaq 2.6%.
Yields on the ten-year Treasury Bond—a bellwether of investor confidence that’s struggled to recover from historic lows during the pandemic—also continued to fall, dipping 3% to 0.759% on Wednesday morning, wiping out a week of gains that pushed the indicator to a four-month high last Thursday.
Early-morning earnings reports shed light on the ongoing turmoil facing a slew of nontech industries: Boeing reported its fourth-straight quarterly loss and said it would lay off thousands of employees as part of its “business transformation” initiatives.
UPS, meanwhile, managed to beat Wall Street expectations on an ongoing surge in package delivery, though its shares fell with the broader market; shares of GE, on the other hand, were up more than 5% thanks to a surprise profit on successful cost-cutting initiatives.
Oil prices are also tanking Wednesday morning; the price of a barrel of West Texas Intermediate–the main North American oil benchmark–was down close to 5% just before the market open.
European markets were also roiling on Wednesday: As of U.S. market open, the U.K.’s FTSE 100 was down 1.5%, while France’s CAC 40 had fallen 2.5%.
“The double whammy of a stalled stimulus bill and new highs in cases is a harsh reminder of the many worries that are still out there,” says Ryan Detrick, a chief market strategist for LPL Financial. “Most of the recent economic data has been strong, but when you see parts of Europe going back to rolling shutdowns, it reminds us this fight is still far from over.”
With the odds of a stimulus bill passing before next year looking incredibly unlikely, the market’s been in flux over the past week, as heightened preelection uncertainty and now surging coronavirus cases further dampen investor sentiment. Data from The Conference Board released Tuesday showed that consumer confidence declined in October after increasing sharply in September. “Consumers’ assessment of current conditions improved while expectations declined, driven primarily by a softening in the short-term outlook for jobs,” said Lynn Franco, a senior director at The Conference Board. “There is little to suggest that consumers foresee the economy gaining momentum in the final months of 2020, especially with Covid-19 cases on the rise and unemployment still high.”
Stock market volatility is at a four-month high, with CBOE’s Volatility Index surging 12% on Wednesday.
What To Watch For
Third-quarter GDP data is scheduled for release on Thursday morning. ING Chief International Economist James Knightley said the expected record annualized expansion of more than 30% is likely due to “stimulus-boosted incomes, despite the tremendous losses suffered in the first half of the year. . . . Fading stimulus programs coupled with an increase in new Covid cases hindering this growth trajectory and providing a less-than-promising outlook for the fourth quarter.”
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