Dow drops 200 points after COVID-19 diagnosis

Dow sheds 550 points as COVID-19 cases spike, stimulus hits impasse

Jessica Menton
 
| USA TODAY
COVID stimulus deal: What Democrats, Republicans and Trump wantA new coronavirus stimulus deal is still in the works between Democrats and Republicans, bu they can’t agree on a conclusion.U.S. stocks opened sharply lower Wednesday, deepening this week’s losses as countries tighten precautions to try to stem rising numbers of coronavirus infections.The Dow Jones industrial average tumbled 550 points, adding to recent declines after the blue-chip average shed 650 points on Monday. The S&P 500 dropped 1.8%, and was off 5.3% from its record heading into Wednesday. The Nasdaq Composite slumped 1.6%. The declines were led by losses in companies that would benefit from the economy reopening, including airline and cruise liners. Few sectors, such as communication and IT services, are gaining amid the outbreaks. Optimism that the pandemic may have been brought somewhat under control has dissipated as infections continue to rise in the U.S., Europe and other parts of the world. Investors are clamoring for Congress to deliver more virus relief for the U.S. economy, but they’re increasingly acknowledging it won’t happen anytime soon.’I will be put out of my house’: Some Americans who struggled early in crisis are on brink, others find jobsUnemployment benefits: Racial disparity in jobless aid grows as Congress stalls on COVID-19 stimulusThe uncertainty surrounding the upcoming U.S. election also has left market players wary.“With the U.S. election next week, virus cases rising across the globe, and the lack of an agreement on stimulus in Congress, it appears market participants have shifted toward a risk-off tone,” Charlie Ripley, senior investment strategist at investment advisor Allianz Investment Management, said in a note. Governments have begun to impose restrictions on businesses and other activities to help curb surging infections. That could choke off improvements seen since the summer. Fresh pandemic precautions are also drawing a public backlash despite spiking levels of illness in European countries.A USA TODAY analysis of Johns Hopkins data through late Tuesday shows 20 states set records for new cases in a week while three states had a record number of deaths in a week: Nebraska Tennessee and Wyoming. The U.S. has reported more than 8.7 million cases and more than 226,600 deaths.The additional surge in coronavirus cases are giving investors pause as it dents hopes for further reopenings that have been gaining steam in recent months. To be sure, even though volatility will likely pick up in the next week due to uncertainty surrounding the election results, analysts remain optimistic about the economic recovery on prospects for a COVID-19 vaccine. “Regardless of whether we see a surge this fall and winter, at some point the virus will run its course and whether it’s a vaccine or more effective treatments that accelerates this process, consumers will eventually get back to ‘normal,’” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, a registered investment advisor, said in a note.Economists expect a report on Thursday to show that the U.S. economy grew at an annual rate of 30.2% during the summer quarter after shrinking 31.4% during the second quarter.Wall Street’s caution is also apparent in how it’s reacting to corporate profit reports. Through the first two weeks of earnings season, companies that reported better results than expected have not been getting the typical pop in their stock price the day after.In energy trading, benchmark U.S. crude lost $1.62 to $37.95 per barrel in electronic trading on the New York Mercantile Exchange. It gained $1.01 to $39.57 per barrel on Tuesday.Brent crude, the international standard, fell $1.39 to $40.22 a barrel.Elsewhere, France’s CAC 40 dropped 3.5%, while Germany’s DAX dropped 3.3%. Britain’s FTSE 100 lost 2.3%.In Asia, Japan’s benchmark Nikkei 225 fell 0.3%. Hong Kong’s Hang Seng dipped 0.3%, while the Shanghai Composite gained 0.5%.Contributing: The Associated Press


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