Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Indexes & Markets

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 

Stocks Drop on Coronavirus Uptick, Fading Stimulus Hopes

10/26/2020 | 08:47am EST

By Anna Hirtenstein

Stocks and oil prices fell Monday, as coronavirus cases surged in the U.S. and Europe, adding to worries about the economic outlook after Congress and the White House failed to agree on a much-anticipated fiscal stimulus deal.

The S&P 500 dropped 1% in early New York trading. Last week, the broad-market index retreated 0.5%. The Dow Jones Industrial Average retreated 1%, or 295 points, and the tech-heavy Nasdaq Composite Index fell 0.9%.

The U.S. reported 60,789 new cases on Sunday, down from recent record-setting levels, but up from a week earlier. Scientists had been expecting cooler weather to lead to a second wave of the disease, but it is coming earlier than many had anticipated. That is prompting fresh concerns about tighter lockdown restrictions and the effect on the economy.

"It's a worrying picture for sure. You may have to account for the possibility that by midwinter, there might be circuit breakers implemented," including stringent short-term shutdowns, said David Stubbs, head of investment strategy at J.P. Morgan Private Bank. "But we always knew this recovery would be stop-start: We won't be truly moving into the main part of a new cycle until the health care issue itself is dealt with."

Investors are watching this week's talks in Congress for any indication on advances in the negotiations for a fiscal stimulus deal. House Speaker Nancy Pelosi told CNN on Sunday that she was expecting more answers on Monday and that an agreement could be reached this week among lawmakers. But Democrats and White House officials are blaming each other for the lack of progress after the two sides went into the weekend without a deal, dimming hopes for an agreement before Nov. 3.

"We have doubt that any strong agreement will be found before the election, we just have days to go," said Luc Filip, head of private banking investments at SYZ Private Banking. "It's kind of a game where you show that you want to find an agreement, but I'm not sure of the real willingness behind it."

He has sold off longer-dated U.S. Treasurys, U.S. stocks and dollars ahead of the election, and instead bought Chinese equities and exchange-traded funds.

"The Chinese economic momentum is really showing a lot of strength and it's the only place in this world where you have this dynamism," Mr. Filip said.

Oil prices slipped. Brent crude, the international benchmark, dropped 2.2% to $40.87 a barrel. A cease-fire in Libya has led analysts to project the country's output will reach 1 million barrels a day in the next four weeks, up from about half a million a day, according to Bjarne Schieldrop, chief commodities analyst at SEB. The rise in coronavirus infections is also muting prospects for the economic recovery and damping demand, he said.

"We have oil being hit from both sides of the equation. Libya supply is seeing a rapid increase," Mr. Schieldrop said. "At the same time, demand is being hit by a wave of new Covid-19 cases and with new lockdowns."

The pan-continental Stoxx Europe 600 retreated 1.1%, led by a decline in German stocks.

Coronavirus cases are accelerating in Europe. France reported over 52,000 new infections on Sunday, a daily high. Italy is trying to rein in the spread with new rules, such as the mandatory closure of restaurants and bars at 6 p.m. Spain declared a state of emergency, as it did in March.

Among European equities, business-software maker SAP plunged nearly 20% after cutting its outlook for the year and reporting a decline in quarterly sales and profit. The company said businesses are being more cautious about spending and investment.

In Asia, most major equity benchmarks closed lower. China's Shanghai Composite Index fell 0.8%. Markets in Hong Kong were closed for a public holiday.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note declined to 0.810%, from 0.840% on Friday. The yield on Italy's equivalent bond dropped the most since June, falling as low as 0.673% before recovering to 0.710%, after rating company S&P Global revised its outlook on the nation to stable from negative on Friday evening. Prices rise when yields fall.

The WSJ Dollar Index, which measures the greenback against a basket of currencies, added 0.3%. The Turkish lira weakened 1.6% against the dollar, reaching a record low, after President Erdogan urged Turks to boycott French goods amid rising tensions between the two countries.

Fresh data on the U.S. housing market will be released at 10 a.m. ET. The number of new homes sold in the month of September will be scrutinized by investors as an indicator of consumer spending and economic growth.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

10-26-20 0946ET

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.58% 29872.47 Delayed Quote.4.67%
NASDAQ 100 0.60% 12152.215271 Delayed Quote.39.15%
NASDAQ COMP. 0.48% 12094.402197 Delayed Quote.34.79%
S&P 500 -0.16% 3629.65 Delayed Quote.12.35%
Latest news "Markets"
05:55aDow, S&P 500 on Track to End Week Near Record Highs
DJ
05:24aSensex, Nifty slip before GDP data; auto stocks shine
RE
05:18aSpain's BBVA lifts European stocks, vaccine worries weigh
RE
03:39aEuropean stocks set for fourth weekly gain but vaccine worries weigh
RE
11/26TSX climbs to 9-month high, led by tech and mining shares
RE
11/26U.s. s&p 500 e-mini stock futures fall 0.19% in early asian trade
RE
11/26TSX climbs to 9-month high, led by tech and mining shares
RE
11/26EUROPE : European shares move little as focus turns to economic damage from COVID
RE
11/26Stock Futures Waver in Muted Holiday Trading
DJ
11/26Oil rally stalls on signs of more supply, demand doubts
RE
Latest news "Markets"