NEW YORK: Wall Street’s main indexes closed lower on Monday as concerns about new lockdowns in Europe and possible delays in fresh stimulus from Congress raised fears the US economy faces a longer road to recovery than previously hoped for.
The death of US Supreme Court Justice Ruth Bader Ginsburg also appeared to make the passage of another stimulus package in Congress less likely before the Nov. 3 presidential election, sparking large declines in the healthcare sector.
The Dow shed as much as 900 points and the CBOE Market Volatility index, Wall Street’s fear gauge, shot up to its highest level in nearly two weeks. The S&P 500 ended down less than 9% from its record high on Sept. 2 after paring losses that had pushed the benchmark almost into corrective territory.
Economic concerns are weighing most heavily on stocks, said David Joy, chief market strategist at Ameriprise.
“Although nothing is being spared, the economically sensitive groups are getting hit the hardest,” said Joy, adding that “Washington appears to be no closer to a possible fourth stimulus package.”
Congress has for weeks remained deadlocked over the size and shape of another coronavirus-response bill, on top of the roughly $3 trillion already enacted into law.
Wall Street has tumbled in the past three weeks as investors dumped heavyweight technology-related stocks following a stunning rally that lifted the S&P 500 and the Nasdaq to new highs after plunging in March as economies entered recession.
A new round of business restrictions would threaten a nascent recovery and further pressure equity markets. The first lockdowns in March led the S&P 500 to suffer its worst monthly decline since the global financial crisis.
In contrast to last week’s downturn, declines were led by value-oriented sectors such as industrials, energy and financials as opposed to technology stocks.
Airline, hotel and cruise companies tracked declines in their European peers as Britain signalled the possibility of a second national lockdown. Europe’s travel and leisure index marked its worst two-day drop since April.
The largest gainer on the Nasdaq 100 was Zoom Video Communications Inc, which rose 6.8% on the prospect that fresh lockdowns would spur greater use of the product.
The Dow Jones Industrial Average fell 509.72 points, or 1.84%, to close at 27,147.7, the S&P 500 lost 38.41 points, or 1.16%, to 3,281.06 and the Nasdaq Composite dropped 14.48 points, or 0.13%, to 10,778.80.
JPMorgan Chase & Co and Bank of New York Mellon Corp fell 3.1% and 4.0%, respectively, on reports that several global banks moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money.
Nikola Corp plunged 19.3% after its founder, Trevor Milton, stepped down as executive chairman following a public squabble with a short-seller over allegations of nepotism and fraud.
General Motors Co, which recently said it would take an 11% stake in the electric truck maker, slipped 4.76%.
Volume on US exchanges was 10.62 billion shares.
Declining issues outnumbered advancing ones on the NYSE by a 5.94-to-1 ratio; on the Nasdaq, a 4.25-to-1 ratio favoured decliners.
The S&P 500 posted 1 new 52-week high and 1 new low; the Nasdaq Composite recorded 20 new highs and 54 new lows.
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