Wall Street near seven-week low on virus fears, stimulus fog

By Devik Jain and Shreyashi Sanyal (Reuters) - Wall Street's main indexes hit their lowest in nearly seven weeks on Monday as concerns about fresh coronavirus-driven lockdowns and a stalemate in Congress over more fiscal stimulus raised fears about another hit to the domestic economy. All the major S&P indexes were down, with energy leading declines as oil prices slid on the possible return of Libyan production and rising coronavirus cases. The CBOE Market Volatility index, a measure of investor anxiety, shot up to its highest level in nearly two weeks

Reuters September 22, 2020 00:05:10 IST
Wall Street near seven-week low on virus fears, stimulus fog

Wall Street near sevenweek low on virus fears stimulus fog

By Devik Jain and Shreyashi Sanyal

(Reuters) - Wall Street's main indexes hit their lowest in nearly seven weeks on Monday as concerns about fresh coronavirus -driven lockdowns and a stalemate in Congress over more fiscal stimulus raised fears about another hit to the domestic economy.

All the major S&P indexes were down, with energy leading declines as oil prices slid on the possible return of Libyan production and rising coronavirus cases.

The CBOE Market Volatility index, a measure of investor anxiety, shot up to its highest level in nearly two weeks.

Wall Street has tumbled in the past three weeks as investors dumped heavyweight technology-related stocks following a stunning rally that returned the S&P 500 and the Nasdaq to record highs.

Another round of business restrictions will threaten a nascent recovery in the wider economy and add further pressure on equity markets, analysts said. The first round of lockdowns in March had led the S&P 500 to suffer its worst monthly decline since the global financial crisis.

In contrast to last week's trend, declines were led by value-oriented sectors such as industrials and financials as opposed to technology stocks.

Analysts said the passing of U.S. Supreme Court Justice Ruth Bader Ginsburg also decreases the chances of another fiscal stimulus package to help lift the domestic economy from a deep recession.

Tom Martin, senior portfolio manager at GLOBALT Investments in Atlanta, said finding a replacement for Justice Ginsburg is going to take up the time and energy of Congress.

"So there's going to be very little bandwidth for putting in a new fiscal bill with this new development."

Congress has for weeks remained deadlocked over the size and shape of a fifth coronavirus -response bill, on top of the approximately $3 trillion already enacted into law.

The passing of Justice Ginsburg could also lead to a tie vote when the Supreme Court hears the challenge to the constitutionality of the Affordable Care Act (ACA) in November, Brokerage Mizuho said.

Healthcare provider Universal Health Services, which is expected to have the greatest exposure to the reform, fell 11.9%.

At 11:39 a.m. ET the Dow Jones Industrial Average was down 892.05 points, or 3.23%, at 26,765.37, the S&P 500 was down 83.06 points, or 2.50%, at 3,236.41 and the Nasdaq Composite was down 211.02 points, or 1.96%, at 10,582.27.

JPMorgan Chase & Co and Bank of New York Mellon Corp fell 4.4% and 4.9%, 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.

The S&P banking subindex lost 4.3%.

Nikola Corp crashed 20.3% 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 took an 11% stake in Nikola for about $2 billion earlier this month, slipped 6.7%.

Airline, hotel and cruise companies tracked declines in their European peers as the UK signalled the possibility of a second national lockdown.

Declining issues outnumbered advancers for a 10.22-to-1 ratio on the NYSE and for a 6.86-to-1 ratio on the Nasdaq. The S&P index recorded one new 52-week high and one new low, while the Nasdaq recorded 11 new highs and 43 new lows.

(Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Sagarika Jaisinghani and Anil D'Silva)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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