S&P 500 falls into worst stock market rout in seven weeks

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Shares fell in the United States and Europe as rising coronavirus infections and tougher lockdowns added to concerns about the economic blow from the pandemic.The S&P 500 Index fell more than 2.5%, heading for the largest drop in seven weeks, amid an increase in hospitalizations related to COVID-19, particularly in the Midwest. Energy stocks fell along with oil prices, and tech stocks were also among the worst performers. The VIX Index, a measure of expected volatility in US stocks, hit its highest level since June.

Boeing Co. fell to a month-long low as it announced plans for more job cuts. Microsoft Corp. was among the biggest drag on the S&P 500, with investors focusing on a forecast lower than analysts’ highest expectations, beyond a decidedly bullish earnings and sales report. General Electric Co. won after reporting a surprise profit.

The Stoxx Europe 600 index fell to its lowest level in five months, losing more than 3% at one point after German Chancellor Angela Merkel reached a deal for a one-month partial lockdown to curb the spread virus. Auto and real estate stocks saw the steepest declines.

Markets in the United States and Europe have fallen sharply this week as cases of the virus increase and U.S. lawmakers fail to agree on an economic aid package ahead of the November 3 election. Analysts are also warning of increased market volatility ahead of the presidential election and after the election, with some saying a contested outcome is still possible.

“As you see the cases increase and decrease in activity across the country, this translates directly into an impact on GDP growth,” said Phil Toews, managing director of asset manager Toews Corp. “The lack of fiscal stimulus means unemployed people who were able to keep buying things will no longer be able to do so. ”

Elsewhere, oil has fallen sharply due to worrying lockdowns that will undermine demand. Bitcoin experienced its biggest drop in almost two months after hitting its highest level since January 2018.

In Asia, equities performed better. The MSCI Asia-Pacific Index edged down on Wednesday, and markets in South Korea and Shanghai posted modest gains. In China, indicators monitored by Bloomberg showed that the recovery continued to display mixed signals while remaining broadly stable in October.

Here are some events to watch out for this week:

  • The Bank of Japan and the European Central Bank have monetary policy decisions on Thursday, followed by briefings from Governor Haruhiko Kuroda and President Christine Lagarde.
  • The Communist Party of China Central Committee is holding its plenum until Friday, when it is expected to chart the course for the development of the economy for the next 15 years.
  • Brexit negotiating teams have entered intense daily talks, and these are expected to continue as the two sides work to finalize a deal by mid-November.
  • The first third-quarter U.S. GDP reading on Thursday is expected to be the highest on record after a record plunge in the previous quarter as many businesses were shut down by the pandemic.

Here are the main movements in the markets:

Stocks

  • The S&P 500 Index fell 2.4% at 12:08 p.m. New York time.
  • The Stoxx Europe 600 index fell 2.9 percent.
  • The MSCI Asia-Pacific index fell 0.5%.

Devises

  • The Bloomberg Dollar Spot Index rose 0.7 percent.
  • The British pound fell 0.4 percent to US $ 1.2998.
  • The Japanese yen gained 0.1 percent to 104.32 per dollar.

Obligations

  • The yield on 10-year Treasury bills was little changed at 0.77%.
  • Germany’s 10-year yield was little changed at -0.62 percent.
  • Britain’s 10-year yield fell one basis point to 0.22 percent.

Basic products

  • West Texas Intermediate crude sank 5.2 percent to US $ 37.51 a barrel.
  • Gold fell 1.3% to US $ 1,882.91 an ounce.

– With the help of Adam Haigh, Greg Ritchie, Todd White and Sophie Caronello.



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