What’s happening: US stocks tumbled on Monday, with the Dow Jones index recording its biggest single-day downturn in around two months.
What happened: The US and Europe witnessing another wave of coronavirus cases weighed on global financial markets yesterday. Wall Street’s reaction was the strongest, with waning hopes of a fresh stimulus package being announced before the Presidential election.
There are signs of US stocks opening slightly higher today, after the massive sell-off.
Why it matters: The US reported a record 83,757 new infections on Friday, surpassing the earlier high of 77,632 on July 16. Another 80,000 cases were reported on Saturday. The 7-day moving average of covid-19 cases in the country stood at 68,767, higher than the 14-day moving average of 62,387.
Various countries in Europe have also started imposing tighter restrictions in order to control the further spread of the virus. The Spanish government announced a state of national emergency, while Italy has imposed restrictions for at least a month.
Investors had little to cheer, with prospects of another round of stimulus appearing bleak, at least before the elections. Disappointing economic data added to the woes. Home sales declined by 3.5% to an annual pace of 959,000 in September, while the Chicago Fed’s national activity index fell to 0.27, from a reading of 1.11 in August.
The energy sector was among the worst performers on Monday, with the Energy Select Sector SPDR ETF plummeting around 3.5%. Travel-related stocks also suffered significantly, with shares of Royal Caribbean Group and Carnival Corp sliding around 9% each. Amid the gloom, shares of Hasbro Inc lost around 9% despite the toy maker reporting better-than-expected third-quarter profits and revenues. SAP’s shares also tumbled by more than 23% after the German company lowered its outlook for the year.
After losing more than 900 points at one point, the Dow Jones index finally settled lower by 650.19 points at 27,685.38, following a 1% decline last week. The blue-chip index also recorded its biggest drop in both points and percentage since September 3.
The S&P 500 declined 1.9% to close at 3,400.97, suffering its biggest decline since September 23. The Nasdaq 100 tumbled 1.6% to finish at 11,358.94, following a 1.1% decline last week.
What to watch: Markets are preparing for an important round of quarterly earnings this week, with earnings reports from tech giants like Apple, Facebook, Alphabet (Google’s parent), Amazon and Microsoft.
Investors also await a basket of economic reports from the country, including durable goods orders, home price index, Richmond Fed manufacturing index and consumer confidence. New orders for manufactured durable goods are expected to rise 0.5% in September, while S&P CoreLogic Case-Shiller home price index might improve by 0.5% in August.
Investors will continue monitoring covid-19 cases and talks related to the fresh fiscal stimulus.
With stock futures gaining in overnight trading, there are hopes of Wall Street beginning today’s session slightly higher.