Dow Tumbles as Virus Fears Wash Over Wall Street

Dow Tumbles as Virus Fears Wash Over Wall Street  | Oct 26, 2020 20:09

Dow Tumbles as Virus Fears Wash Over Wall Street

By Yasin Ebrahim –The Dow slumped Monday, as investors weighed up positive remarks on stimulus against a surge in Covid-19 infections that threatens economic recovery.

The Dow Jones Industrial Average fell 2.3%, or 650 points. The S&P 500 was down 1.8%, while the Nasdaq Composite fell 1.6%.

Coronavirus infections in the U.S. hit a record, adding more than 85,000 through Saturday, Bloomberg reported, after surpassing the previous record on Friday of 83,757 new cases.

Positive remarks on stimulus talks, meanwhile, did little to lift expectations the economy would receive a fiscal boost before the U.S. election on Nov. 3.

"As the nation faces record spikes in new COVID cases, we continue to eagerly await the Administration's acceptance of our health language, which includes a national strategic plan on... testing and tracing. We are hopeful their response will be positive as we also await the outcomes of talks between committee chairs. It is clear that our progress depends on Leader McConnell agreeing to bipartisan, comprehensive legislation to crush the virus, honor our heroes - our essential workers - and put money in the pockets of the American people. The Speaker remains optimistic that an agreement can be reached before the election," said Drew Hammill, who is Speaker Nancy Pelosi's deputy chief of staff.

Energy and industrials led the move lower in value stocks, with the latter down on heavy selling in airline stocks as the spike in cases raised concerns that restrictions to curb infections could prompt airlines to cut capacity further. 

American Airlines (NASDAQ:AAL) and Delta Air Lines (NYSE:DAL) were down 6% while United Airlines Holdings Inc (NASDAQ:UAL) slumped 7%. In other aviation news, Boeing (NYSE:BA) ended 4% lower after China threatened tariffs on the aircraft maker and other defense contractors over arms sales to Taiwan. 

Financials gave up some of their gains from last week as banking stocks were abandoned after Treasury yields reversed sharply, with United States 10-Year down 5%.

JPMorgan Chase (NYSE:JPM) fell 2%, while Bank of America (NYSE:BAC) and Citigroup (NYSE:C) slipped more than 1%.

Tech, which had led the rally since the mid-March bottom, ended off the lows of the day as the Fab 5 cut some losses. (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) ended flat, while Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) closed about 3% lower.

Facebook, meanwhile, said it would launch a game streaming service to rival Google’s cloud gaming service Stadia.

Positive news on the vaccine front from AstraZeneca, meanwhile, did little to keep losses in check.

AstraZeneca PLC ADR (NYSE:AZN) rose more than 2% after the company said its coronavirus vaccine candidate had triggered an immune response in both younger and older adults. 

On the economic front, the rapid growth in housing activity slowed in September, with some warning of further slowing to come. New home sales fell to 959,000 units last month from 994,000 a month earlier, missing forecasts of 1 million.

"The single-family housing market is still registering strong demand … however, record-low supply is pushing up prices even faster, which is hindering potential buyers from affording new homes,” said Grant Thornton Economist Yelena Maleyev. "This will be exacerbated by the lack of additional COVID-19 support from Congress; the scars of this recession will run deep," Maleyev added.

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