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Stock Losses Accelerate; Dow Drops More Than 800 Points

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09/21/2020 | 11:47am EDT

By Anna Isaac and Ben Eisen

The Dow Jones Industrial Average dropped more than 800 points Monday, extending the stock market's retreat into a fourth consecutive week.

Stocks charged higher for much of the summer, but sentiment has soured in September. Investors are assessing an array of risks including delays to additional fiscal-stimulus packages, an increasingly heated U.S. election campaign season, continuing tensions with China and the threat of renewed lockdowns in many places because of higher coronavirus infections.

Meanwhile, shares of some of the largest technology companies, which helped drive the market to records over the summer, are now dragging it lower.

The blue-chip benchmark slid 2.7%, and the S&P 500 fell 2.1%. The tech-heavy Nasdaq Composite fell 1.7% after closing Friday at its lowest level since Aug. 11.

The S&P 500 was off more than 7% from its Sept. 2 record through Friday's close, while the Nasdaq Composite was down more than 10%. The Dow has yet to reclaim its prepandemic high and was about 6% below its February record.

Monday's selloff was broad, with all 11 sectors of the S&P 500 falling and 29 of 30 Dow components trading lower as well. The broad index was led lower by the energy sector, which fell 4.3%, and industrials group, down 3.5%.

In the Dow, American Express declined 6.1%, Honeywell International fell 5.2% and 3M lost 4.9%.

A closely watched barometer of expected turbulence in U.S. stocks, the Cboe Volatility Index, also jumped Monday to its highest level in weeks.

Some investors sought safety in government bonds, pulling the yield on the benchmark 10-year Treasury note down to 0.658% from 0.694% Friday. Bond prices and yields move in opposite directions.

Brent crude, the international energy benchmark, dropped 4.2% to $41.37 a barrel. Analysts said the drop was triggered by signals that Libya could renew its supply of oil to the global market at a time when demand for oil has dropped. Gold fell 2.9% to $1,917.90 a troy ounce.

Bank stocks were also down broadly, with Wells Fargo and Morgan Stanley both off almost 5%. Shares of JPMorgan Chase, the largest U.S. bank by assets, fell 4.3% after news articles detailed "suspicious activity reports" filed by it and other major banks to U.S. authorities. Shares of HSBC Holdings, also named in the news reports, hit a 25-year low in Hong Kong.

Elsewhere, shares of Oracle rose 1.9%. President Trump said he has agreed in concept to a deal under which Chinese-owned video-sharing app TikTok will partner with Oracle and Walmart to become a U.S.-based company, capping negotiations that have stirred debate over national security and the future of the internet. The Commerce Department said it would delay a ban on U.S. downloads and updates for the TikTok app that was set to take effect at 11:59 p.m. Sunday.

Shares of Illumina dropped 8.2%. The maker of machines that sequence genes will pay $7.1 billion in cash and stock for a developer of a long-sought blood test that promises to detect canc er early, people familiar with the matter said.

Nikola's stock plummeted 23% after it was reported that founder and Executive Chairman Trevor Milton is stepping down from the electric-truck startup amid allegations from a short seller that he and the company had made false statements to investors.

Over the weekend, China's Ministry of Commerce laid out penalties for companies and individuals it deems to be "unreliable entities," including potential restrictions on staffing and investment in China, curbs on imports and exports, and fines.

The list is aimed at identifying foreign entities and individuals that could harm Chinese interests. No names have thus far been disclosed. The development is likely to add another stress point to the already strained relations between the U.S. and China, as it signals Beijing may step up retaliatory measures, investors said.

"There's the broader macro risk that this might be China starting to become more combative in its use of sanctions," said Edward Park, deputy chief investment officer at Brooks Macdonald. "That wasn't really on the markets' radar."

Overseas, the pan-continental Stoxx Europe 600 fell 3.2%, led lower by sharp drops in the banking and travel and leisure sectors. The gauge is on track for its lowest closing level since the end of July. Coronavirus cases have been rising across major European economies, leading to speculation that governments will be forced to implement new lockdowns that will curtail business and social activity across the region.

"The worry is definitely that we're going to see restrictions on economies and that's going to have a big negative impact going forward," said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. "There's the noise from politicians across Europe on the threat of further lockdown, that we've reached a tipping point on the rate of infections."

In Asia, most major stock benchmarks declined. Hong Kong's Hang Seng Index retreated 2.1%, while China's Shanghai Composite ticked down 0.6%. Japan was closed for a holiday.

Write to Anna Isaac at anna.isaac@wsj.com and Ben Eisen at ben.eisen@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
3M COMPANY -0.53% 169.8 Delayed Quote.-3.75%
AMERICAN EXPRESS COMPANY -3.64% 100.98 Delayed Quote.-18.89%
BROOKS MACDONALD GROUP PLC -4.24% 1580 Delayed Quote.-26.34%
DJ INDUSTRIAL -0.10% 28335.57 Delayed Quote.-0.71%
HANG SENG 0.65% 24940.78 Real-time Quote.-11.53%
HONEYWELL INTERNATIONAL INC. -0.74% 175.54 Delayed Quote.-0.82%
HSBC HOLDINGS PLC 4.71% 321.4 Delayed Quote.-45.70%
JPMORGAN CHASE & CO. 0.90% 103.81 Delayed Quote.-25.53%
LONDON BRENT OIL -1.65% 41.66 Delayed Quote.-35.76%
MORGAN STANLEY 0.19% 51.87 Delayed Quote.1.47%
NASDAQ 100 0.25% 11692.571891 Delayed Quote.33.89%
NASDAQ COMP. 0.37% 11548.281629 Delayed Quote.28.71%
NIKOLA CORPORATION -0.79% 22.54 Delayed Quote.118.41%
S&P 500 0.34% 3465.39 Delayed Quote.7.26%
S&P/CITIC 300 INDEX -0.25% 4090.33 Delayed Quote.15.17%
S&P/CITIC 50 INDEX -0.43% 4111.8 Delayed Quote.10.03%
STOXX EUROPE 600 0.62% 362.5 Delayed Quote.-12.83%
STOXX EUROPE 600 NR 0.62% 797.33 Delayed Quote.-11.16%
WALMART INC. 0.21% 143.85 Delayed Quote.21.05%
WELLS FARGO & COMPANY 0.13% 23.28 Delayed Quote.-56.73%
WTI -2.04% 39.715 Delayed Quote.-33.87%
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