Wall Street hits near 7-week low on Coronavirus fears, stimulus fog

By: |
September 21, 2020 8:39 PM

Wall Street's main indexes have tumbled in the past three weeks as investors dumped heavyweight technology-related stocks following a stunning rally that returned the S&P 500 and the Nasdaq to record highs.

Wall Street’s main indexes hit their lowest in nearly seven weeks on Monday as concerns about fresh coronavirus-driven lockdowns and the inability of Congress to agree on more fiscal stimulus raised fears about another hit to the domestic economy.

All the major S&P indexes were down, with energy leading declines as oil prices slid on the possible return of Libyan production and rising coronavirus cases.

Wall Street’s main indexes have tumbled in the past three weeks as investors dumped heavyweight technology-related stocks following a stunning rally that returned the S&P 500 and the Nasdaq to record highs.

Another round of business restrictions will threaten a nascent recovery in the wider economy and add further pressure on equity markets, analysts said. The first round of lockdowns in March had led the S&P 500 to suffer its worst monthly decline since the global financial crisis.

“We’ve been in a momentum type trading market now for weeks,” said Rick Meckler, a partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“When the market ran up, its biggest reason was people wanted to get in before it was even higher. And now people are becoming nervous that the almost extraordinary gains for this year will all be given back.”

Thomas Mantione, managing director at UBS Private Wealth Management in Stamford, Connecticut, said the passing of U.S. Supreme Court Justice Ruth Bader Ginsburg also decreases the chances of another fiscal stimulus package to help lift the domestic economy from a deep recession.

“You’ve now put yet another negotiating factor into that fiscal stimulus policy response, which makes it even less likely to pass before the November election,” Mantione said.

Congress has for weeks remained deadlocked over the size and shape of a fifth coronavirus-response bill, on top of the approximately US$3 trillion already enacted into law.

At 10:02 a.m. ET the Dow Jones Industrial Average was down 588.64 points, or 2.13per cent, at 27,068.78, the S&P 500 was down 59.80 points, or 1.80per cent, at 3,259.67, and the Nasdaq Composite was down 142.45 points, or 1.32per cent, at 10,650.83.

The CBOE Market Volatility index , a measure of investor anxiety, shot up to its highest level in nearly two weeks.

JPMorgan Chase & Co and Bank of New York Mellon Corp fell 2.6per cent and 1.8per cent, respectively, on reports that several global banks moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money.

The S&P banking subindex lost 2.1per cent.

Nikola Corp crashed 17.9per cent after its founder Trevor Milton stepped down as executive chairman following a public squabble with a short-seller over allegations of nepotism and fraud.

General Motors Co , which took an 11per cent stake in Nikola for about US$2 billion earlier this month, slipped 5per cent.

Airline, hotel and cruise companies tracked declines in their European peers as the UK signalled the possibility of a second national lockdown.

Declining issues outnumbered advancers 8.60-to-1 on the NYSE and 5.27-to-1 on the Nasdaq

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded eight new highs and 21 new lows.

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