Off The Wire
S&P 500, Dow sink 3% to late-September lows on virus, election worry
NEW YORK (Reuters) - The S&P 500 and the Dow slumped on Wednesday to their lowest levels since late September, as coronavirus cases climbed globally and investors also worried about the possiblity of a contested U.S. presidential election next week.
A spiraling pandemic and the failure to approve new fiscal stimulus before the Nov. 3 election put the blue-chip Dow on track to close at its lowest since early August. All three major indexes fell about 3%.
Twelve U.S. states set records for hospitalized COVID-19 patients on Tuesday, while Germany announced plans to shut large swathes of public life for a month and France prepared tighter controls as the pandemic surged across Europe.
“Obviously the virus is out of control. It’s spiking, it’s bad,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago. “The concept that ... it’s going to disappear is just a faulty assumption.”
Shares of hotels, airlines and other companies sensitive to COVID-19-related turmoil fell. Wynn Resorts WYNN.O slid 3.6% and the S&P 1500 airlines index .SPCOMAIR declining 4.0%. The energy index .SPNY fell as oil prices tumbled on fears of a deeper drop in fuel demand. [O/R]
With just six days to the election, Wall Street's fear gauge .VIX spiked to its highest level since July 15, also on concerns that a winner might not be declared the night of Nov. 3 due to a delay in counting the huge volume of mail-in ballots.
Democratic challenger Biden leads President Donald Trump nationally by 10 percentage points, according to the Reuters/Ipsos poll, but the competition is tighter in swing states, which will decide the victor.
Investors are worried about whether the election will be contested; a clear “blue wave” that gives Biden and his Democrats control of the White House and Congress; or Trump’s re-election, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
“As people run through the likely scenarios of what could happen with the election, there’s no short-term good answer,” he said.
Losses were broad-based with technology stocks .SPLRCT weighing the most.
At 2:27 p.m. ET (1827 GMT), the Dow Jones Industrial Average .DJI fell 792.7 points, or 2.89%, to 26,670.49. The S&P 500 .SPX lost 96.32 points, or 2.84%, to 3,294.36 and the Nasdaq Composite .IXIC dropped 339.66 points, or 2.97%, to 11,091.70.Of the 206 S&P 500 companies that have reported third-quarter earnings so far, about 83% have topped expectations, according to Refinitiv data. But earnings on average are expected to fall 14.8% from a year earlier.
Microsoft Corp's MSFT.O quarterly results surpassed analysts targets, benefiting from a pandemic-driven shift to working from home and online learning. Its shares, however, fell about 4% after rising nearly 35% so far this year.
General Electric Co GE.N was one bright spot, jumping 8% after posting a surprise quarterly profit and a positive cash flow on the back of cost cuts and improvements in its power and renewable energy businesses. GE was the largest percentage gainer on the S&P 500.
Declining issues outnumbered advancing ones on the NYSE by a 9.52-to-1 ratio; on Nasdaq, a 6.49-to-1 ratio favored decliners.
The S&P 500 posted one new 52-week highs and eight new lows; the Nasdaq Composite recorded 13 new highs and 101 new lows.
Reporting by Herbert Lash, additional reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Sinead Carew, Lewis Krauskopf and Stephen Culp in New York; Editing by David Gregorio, Anil D’Silva and Arun Koyyur