Stocks Have Worst Day in a Month 10/26 16:04
U.S. stocks fell sharply Monday, deepening last week's losses, as a
troubling increase in coronavirus counts put investors in a selling mood.
(AP) -- U.S. stocks fell sharply Monday, deepening last week's losses, as a
troubling increase in coronavirus counts put investors in a selling mood. The
skid came as doubts mount on Wall Street that Washington will come through with
more stimulus for the economy before Election Day.
The S&P 500 slid 1.9%, its biggest single-day decline in more than a month.
The Dow Jones Industrial Average dropped 650 points after having been down more
than 960 during the heaviest selling. Technology companies drove much of the
broad sell-off, though losses in communications services, financial and
industrial stocks helped weigh down the market. Energy stocks also dropped in
tandem with crude oil prices.
Stocks also fell across much of Europe and Asia. In another sign of caution,
Treasury yields pulled back after touching their highest level since June last
"It's kind of a perfect storm," said Ross Mayfield, investment strategy
analyst at Baird. "The record case numbers and the kind of rolling lockdowns
across Europe are getting the headlines. Oil is down on some supply and demand
issues. Stimulus seems more and more unlikely by the day, at least
The S&P 500 fell 64.42 points to 3,400.97. The Dow slumped 650.19 points, or
2.3%, to 27,685.38. The Nasdaq composite lost 189.34 points, or 1.6%, to
11,358.94. Smaller company stocks also took heavy losses, knocking the Russell
2000 index down 35.29 points, or 2.2%, to 1,605.21.
Coronavirus counts are spiking in much of the United States and Europe,
raising concerns about more damage to the still-weakened economy. The U.S. came
very close to setting back-to-back record daily infection rates on Friday and
Saturday. In Europe, Spain's government declared a national state of emergency
on Sunday that includes an overnight curfew, while Italy ordered restaurants
and bars to close each day by 6 p.m. and shut down gyms, pools and movie
Hopes are fading, meanwhile, that Washington will be able to provide more
support for the economy anytime soon. House Speaker Nancy Pelosi and Treasury
Secretary Steven Mnuchin weren't able to reach an agreement in a phone call
Monday, according to a Pelosi aide. The two have been discussing a potential
deal to send cash to most Americans, restart supplemental benefits for laid-off
workers and provide aid to schools, among other things.
Deep partisan difference remains on Capitol Hill, and time is running out
for anything to happen before Election Day on Nov. 3. Any compromise reached
between House Democrats and the White House would also likely face stiff
resistance from Republicans in control of the Senate. Another concern is that
possible delays in sorting out the results of next week's elections could end
up pushing a stimulus deal back indefinitely.
Worries about the diminishing prospect for more stimulus in the short term
helped drive the S&P 500 to a 0.5% drop last week, its first weekly loss in the
"While we are seeing nations attempt to stifle the spread of the virus
through more localised and tentative restrictions, it seems highly likely that
we will eventually see a swathe of nationwide lockdowns if the trajectory
cannot be reversed," said Joshua Mahony, senior market analyst at IG in London.
The U.S. economy has recovered a bit since the stay-at-home restrictions
that swept the country early this year eased, and economists expect a report on
Thursday to show it grew at an annual rate of 30.2% during the summer quarter
after shrinking 31.4% during the second quarter.
But momentum has slowed recently after a prior round of supplemental
unemployment benefits and other stimulus that Congress approved earlier this
Stocks of companies that need the virus to abate and the economy to return
to normal logging some of the sharpest losses Monday.
Norwegian Cruise Line Holdings fell 8.4%, Marathon Oil dropped 7% and United
Airlines lost 7%.
Energy stocks dropped to the largest loss among the 11 sectors that make up
the S&P 500, falling in concert with oil prices. All the stocks in the index
Among the market's few gainers were companies that can succeed even in a
stay-at-home economy. Zoom Video Communications gained 1.2%.
Amazon fared much better than the broader market, recovering from an early
loss to close 0.1% higher, while Apple lost an early gain and ended flat.
Expectations are high for them, and analysts say they'll report strong results
for their latest quarter this week. They and other Big Tech stocks have soared
through the pandemic on hopes their growth will only continue as work-from-home
and other trends that benefit them accelerate.
This upcoming week is the busiest of this quarter's earnings season, with
more than a third of the companies in the S&P 500 index scheduled to report.
Besides Amazon and Apple, Ford Motor, General Electric and Google's parent
company, Alphabet, are also on the docket.
Across the S&P 500, profit reports for the summer have been mostly better
than Wall Street had feared, though they're still on pace to be more than 16%
lower than year-ago levels. Through Friday, 84% of S&P 500 companies reported
better results than analysts had forecast, according to FactSet. If that level
holds, it would be the best since at least 2008, when FactSet's records begin.
Meanwhile, the upcoming U.S. elections could mean more short-term
uncertainty in the markets and the results could determine the size and timing
of any aid from Congress, said Esty Dwek, head of global market strategy at
Natixis Investment Managers.
"It's going to be a little bit volatile in the next week depending on the
results, but we're not expecting weeks of uncertainty," she said.
European and Asian markets closed lower. The yield on the 10-year Treasury
fell to 0.80% from 0.85% late Friday.