Wall Street drops 3%, Dow Jones hits late July low as pandemic rises


NEW YORK (Reuters) – US stocks fell on Wednesday as the Dow Jones closed at lows last seen in late July, as coronavirus cases skyrocketed around the world and investors worried about the possibility of a contested US presidential election next week.

The spiraling pandemic and Washington’s inability to strike a deal on another fiscal stimulus ahead of the Nov. 3 election led all three stock indexes to close more than 3% lower in heavy trading.

The sell-off accelerated in the closing minutes of the session, with the Dow and the benchmark S&P 500 posting their biggest single-day declines since June 11.

Twelve U.S. states set records for hospital patients with COVID-19, while Germany and France have announced plans to shut down large swathes of public life for a month as the pandemic escalates across Europe .

“Obviously, the virus is out of control. It’s a spike, it’s bad, ”said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago. “The concept that … this will go away is just a flawed assumption.”

Shares of hotels, airlines and other leisure-related companies susceptible to COVID-19 unrest tumble, with S&P 1500 Airlines Index .SPCOMAIR 4.3% decrease. The energy index .SLEEP slipped 4.2% as oil prices fell on fears of a deeper drop in fuel demand. [O/R]

Just six days before election, Wall Street’s fear gauge .VIX reached its highest level since June 15. Fears that a winner might not be declared on the night of November 3 also boosted the sell-off.

Democratic challenger Joe Biden leads President Donald Trump nationally by 10 percentage points, according to a Reuters / Ipsos poll, but competition is tighter in the swing states, which will decide the winner.

Investors are concerned about various potential outcomes: that the election could be challenged; a “blue wave” gives Biden a victory and his Democrats control of Congress; or that Trump be re-elected, said Chris Zaccarelli, director of investment at the Independent Advisor Alliance in Charlotte, North Carolina.

“As people go through the probable scenarios of what could happen with the election, there is no right answer in the short term,” he said.

The losses were widespread with tech stocks .SPLRCT, down 4.33%, which weighs the most.

Big tech companies – Apple AAPL.O, Alphabet GOOGL.O and Facebook FB.O – which are expected to release their results on Thursday, all of which fell 4.6% or more. With Microsoft MSFT.O and Amazon.com AMZN.O, they weighed the most on the S&P 500.

The Dow Jones Industrial Average .DJI was down 943.24 points, or 3.43%, to 26,519.95, the S&P 500 .SPX loses 119.65 points, or 3.53%, to 3271.03 and the Nasdaq Composite .IXIC fell 426.48 points, or 3.73%, to 11,004.87.

FILE PHOTO: The facade of the New York Stock Exchange is pictured in Manhattan in New York, New York, USA, October 26, 2020. REUTERS / Mike Segar

The volume on the US stock exchanges was 11.00 billion shares.

According to data from Refinitiv, of the 206 S&P 500 companies that have reported third-quarter profits so far, about 83% have beaten expectations. But profits on average are expected to fall 14.8% from the previous year.

General Electric Co GE.N was a bright spot, jumping 8% after posting surprise quarterly profit and positive cash flow from cost reductions and improved operations in energy and renewables.

Falling issues outnumbered those that rose on the NYSE by a 10.08: 1 ratio; on the Nasdaq, a ratio of 6.28 to 1 helped the declines.

The S&P 500 posted a new 52 week high and nine new lows; the Nasdaq Composite recorded 15 new highs and 110 new lows.

Reporting by Herbert Lash, additional reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Sinead Carew and Lewis Krauskopf in New York; Editing by David Gregorio, Anil D’Silva and Arun Koyyur


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