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Stocks Plunge on Virus Worries 10/28 12:23
Stocks around the world are tumbling Wednesday on worries the worsening
pandemic will mean more restrictions on businesses and drag down the economy.
NEW YORK (AP) -- Stocks around the world are tumbling Wednesday on worries
the worsening pandemic will mean more restrictions on businesses and drag down
the economy.
The S&P 500 was down 2.5% in afternoon trading on Wall Street, after earlier
tumbling as much as 3.1%, and headed for a third straight loss. It's already
down 4.6% this week and threatening to post its biggest weekly fall since
March. That's when the market was in the midst of selling off as strict
lockdowns around the world choked the economy into recession.
The Dow Jones Industrial Average was 691 points lower, or 2.5%, at 26,771,
as of 12:23 p.m. Eastern time, and the Nasdaq composite slumped 2.8%. The
selling was widespread, and roughly 95% of stocks in the S&P 500 were lower.
Markets were dropping even more sharply in Europe, where investors expect
the French president to announce tough measures to slow the virus' spread and
Germany's chancellor is pressing for a partial lockdown that could include the
closures of bars and restaurants. The measures may not be as stringent as the
shutdown orders that swept the world early this year, but the worry is they
could still hit the already weakened global economy.
Policymakers in Europe "must choose between low unemployment or low COVID
transmission rates. Unfortunately, they are now left dealing with the most
sensitive currency of them all, people's lives," Stephen Innes of Axi said in a
report.
In European stock markets, Germany's DAX lost 3.9%, and France's CAC 40
dropped 3.3%. The FTSE 100 in London fell 2.6%.
Coronavirus counts are also climbing at a troubling rate in much of the
United States, and the number of deaths and hospitalizations due to COVID-19
are on the rise. Even if the most restrictive lockdowns don't return, investors
worry that the worsening pandemic could scare away customers of businesses
regardless and sap away their profits.
Stocks of companies that most need the virus to abate for their businesses
to get back to normal were slumping to some of the sharpest losses. Cruise
operators Carnival and Norwegian Cruise Line Holdings fell at least 6%, while
Royal Caribbean fell 3.6%. Delta Air Lines lost 3.3%. Live Nation
Entertainment, which depends on customers going to concerts and other events,
sank 2.9%.
Crude oil also tumbled on worries that an economy already weakened by the
virus would consume even less energy and allow excess supplies to build higher.
Benchmark U.S. crude dropped 5.6% to $37.33 per barrel. Brent crude, the
international standard, fell 4.8% to $39.58 per barrel.
Instead, investors headed into the safety of U.S. government bonds. The
yield on the 10-year Treasury note fell to 0.77% from 0.79% late Tuesday. It
was as high as 0.87% last week.
A measure of fear in the stock market touched its highest level since June,
when the market suddenly tumbled amid concerns that a "second wave" of
coronavirus infections had arrived. The VIX measures how much volatility
investors expect from the S&P 500, and it climbed 16.3% Wednesday.
Even the continued parade of better-than-expected reports on corporate
profits for the summer failed to shift the momentum.
Microsoft, the second-biggest company in the S&P 500, reported stronger
profit and revenue for its latest quarter than expected. That's typically good
for a stock, but Microsoft nevertheless slumped 3.7%. It gave a forecast for
the current quarter that was relatively in line with Wall Street forecasts, but
analysts noted some caveats in it.
UPS fell 5% after also reporting better-than-expected earnings, though it
said the outlook for its business is too cloudy due to the pandemic to offer
any forecasts for its revenue or profits in the current quarter.
Among the few winners was General Electric, which jumped 9.9% after
reporting stronger profit and revenue for the latest quarter than expected.
Automatic Data Processing rose 5.9% after its profit report also topped
expectations.
Companies broadly have not been getting as big a pop in their stock prices
as they typically do after reporting healthier-than-expected profits. Analysts
say that suggests good news on profits has already been built into stock prices
and that the market's focus is elsewhere.
Investors' hopes that Congress and the White House could soon offer more big
support for the economy as it struggles through the pandemic have largely
faded. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have
continued their talks, but investors see little chance of a deal happening
before Election Day next week.
Economists say the economy likely needs such aid after the expiration of the
last round of supplemental unemployment benefits and other stimulus approved by
Washington earlier this year.
Uncertainty about the upcoming presidential election has also been pushing
markets around.
The race seems be getting tighter than it was just a few weeks ago, said
Jamie Cox, managing partner for Harris Financial Group. "It has markets
somewhat unnerved that the prospects of a contested election are back in the
mix," he said.
Cox said he expects more calm in the markets in November after the election
passes and some of the uncertainty over a new aid package fades.
"Aid is coming regardless. There'll be no political motivation to hold it
back after the election," he said. "There's plenty of desire to get money out
to people so I think it will happen one way or another in November."
In Asian stock markets, trading was mixed. Japan's Nikkei 225 fell 0.3%, and
Hong Kong's Hang Seng also lost 0.3%. South Korea's Kospi gained 0.6%, and
stocks in Shanghai rose 0.5%.
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