US Stocks Close Lower on Soaring Virus Cases, Stimulus Stalemate
The major U.S. stock indexes nosedived on Monday on light volume, with the benchmark S&P 500 Index posting its biggest daily decline in four weeks, as a surge in coronavirus cases and a dimmed outlook for a fiscal coronavirus relief bill in Washington dampened the outlook for the U.S. economic recovery.
In the cash market on Monday, the S&P 500 Index settled at 3400.97, down 64.42 or -1.89%, the blue chip Dow Jones Industrial Average finished at 27685.38, down 650.19 or -2.32% and the tech-based NASDAQ Composite closed at 11358.94, down 189.34 or -1.69%.
The two biggest drivers that have investors unnerved is fears about a COVID-19 resurgence and the ongoing failure of the Republicans and Democrats to reach a fiscal aid package. Monday’s price action suggests that the uncertainty caused by these two events is encouraging investors to lighten up on the long side and to stay on the sidelines until prices reach a value area, or they start to get some clarity over the stimulus and the election. As far as the pandemic is concerned, conditions aren’t likely to get better until there is a vaccine available.
Stimulus Deal Before Election Day Looks Less Likely as Pelosi Pushes Mnuchin Over Virus Testing
House Speaker Nancy Pelosi criticized the Trump administration on Monday as Washington fails to send more relief to Americans during a record spike in coronavirus cases.
The California Democrat’s biting letter to House Democrats came only minutes before a nearly hour-long conversation with Treasury Secretary Steven Mnuchin that appeared to yield little progress toward a stimulus agreement. The chances of Congress approving a relief bill before Election Day, November 3, have all but evaporated.
“The Republicans’ continued surrender to the virus – particularly amid the recent wave of cases – is official malfeasance,” Pelosi wrote. She said she expects a response from the White House “several concerns” during the conversation Monday.
“We must come to agreement as soon as possible,” the speaker wrote.
Sectors and Stocks
The tech sector was among the only three sectors apart from healthcare and consumer staples expected to post an increase in profit from a year earlier.
Software company Oracle Corp fell 4.0% after German rival SAP abandoned medium-term profitability targets and warned of a longer-than-expected recovery time from the pandemic.
Hasbro Inc tumbled 9.35% as quarterly adjusted revenue fell due to coronavirus-led delays in production of movies and TV shows.
Just like they behaved in March when the pandemic began, companies deemed stay-at-home winners including Amazon.com Inc, Zoom Video Communications Inc and video game companies Activision Blizzard Inc and Take-Two Interactive Software Inc rose, bucking the downtrend.
Wall Street’s fear gauge, the VIX, hit its highest in more than seven weeks as uncertainty grew over the November 3 election.
Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5% have beaten Wall Street expectations, according to Refinitiv data. Later this week, mega-cap tech firms including Apple Inc, Amazon Inc, Google-parent Alphabet Inc and Facebook Inc, report results.
Volume on U.S. exchanges was 8.72 billion shares, lower than the 20-day average of 8.9 billion shares.
Declining issues outnumbered advancing ones on the NYSE by a 6.23-to-1 ratio; on NASDAQ, a 4.52-to-1 ratio favored decliners, Reuters reported.
The S&P 500 posted four new 52-week highs and two new lows; the NASDAQ Composite recorded 28 new highs and 52 new lows, according to Reuters.