Wall Street slumps as virus cases soar, stimulus remains elusive

Medha Singh and Shivani Kumaresan
·3-min read
FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City
FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City

By Medha Singh and Shivani Kumaresan

(Reuters) - Wall Street's indexes fell sharply on Monday as soaring coronavirus cases and a deadlock in Washington over the next fiscal aid bill darkened the economic outlook in the run up to the Nov. 3 presidential election.

New infections have touched record levels in the United States, with El Paso in Texas asking citizens to stay at home for the next two weeks. In Europe, Italy and Spain imposed new restrictions.

Travel-related stocks that are vulnerable to COVID-19 related curbs dropped. The S&P 1500 airlines index fell 3.7% and cruise line operators Carnival Corp and Royal Caribbean Cruises Ltd shed more than 9% each.

"The fear of what the increasing case loads might do to the U.S. economy is driving the market today," said Marc Chaikin, founder of Chaikin Analytics, a quantitative investment research firm, Philadelphia.

Energy index fell as oil prices shed over 3% on demand concerns and other economically-sensitive industrials and financials sectors posted the steepest percentage declines among S&P sectors.

Meanwhile, U.S. Treasury Secretary Steve Mnuchin said on Monday there were a number of areas in House Speaker Nancy Pelosi's COVID-19 relief plan that President Donald Trump cannot accept.

"The harsh reality is it's going to be very difficult to get as much as the $2 trillion deal even if they have something today or tomorrow," said Ryan Detrick, senior market strategist at LPL Financial, North Carolina.

"It's not going to happen until after the election."

Wall Street's fear gauge hit a five-week high as 60 million Americans cast their ballots in a record breaking early turnout as Trump and his Democratic challenger Joe Biden enter their final week of campaigning.

It is also one of the busiest weeks of the third-quarter earnings season that will see results from mega-cap U.S. tech firms including Apple Inc, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc.

The tech sector, which includes Apple, is among the only three sectors apart from healthcare and consumer staples that is expected to post an increase in profit compared to a year earlier.

Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5% of them have beaten Wall Street expectations, according to Refinitiv data. At 10:44 a.m. ET the Dow Jones Industrial Average fell 520.61 points, or 1.84%, to 27,814.96, the S&P 500 lost 48.04 points, or 1.39%, to 3,417.35 and the Nasdaq lost 84.07 points, or 0.73%, to 11,464.21.

Software company Oracle Corp fell about 5% after its German rival SAP abandoned medium-term profitability targets and cautioned its business would take longer than expected to recover from the pandemic hit.

Hasbro Inc fell about 9% despite beating analysts' estimates for quarterly revenue and profit.

Declining issues outnumbered advancing ones by 6.6-to-1 on the NYSE and 0.3-to-1 on the Nasdaq.

The S&P index recorded three new 52-week highs and one new low, while the Nasdaq recorded 30 new highs and 30 new lows.

(Reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Arun Koyyur)