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Stocks stumble on surge in virus cases, elusive US stimulus

Agence France-Presse

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Stocks stumble on surge in virus cases, elusive US stimulus

People walk by Wall Street in lower Manhattan in New York City on September 2, 2020. The Dow gained 454.84 points, or 1.59 percent, to close at 29,100.50. Closing less than 2 percent from an all-time high, the Dow posted its best rally since mid-July and closed. Spencer Platt/Getty Images/AFP


The Dow closes 2.3% lower on Monday, October 26, the index's worst session since early September 2020

Wall Street had its worst session in weeks on Monday, October 26, driven by spiking virus cases globally that could mean new business-strangling containment measures, as well as the worsening prospects of new stimulus for the United States economy.

Despite months of arduous talks, there appears to be little chance Republicans and Democrats will hammer out a rescue deal to help cash-strapped Americans before the November 3 election, with both sides blaming the other for the impasse.

Analysts said investors had essentially given up hope of an agreement and were now betting on Joe Biden and a Democratic sweep of Congress that would open the way for an even bigger spending package in the new year – but any other scenario could mean further deadlock.

“There will probably be gridlock if Biden wins but the Democrats don’t take the Senate,” said Gregori Volokhine of Meeschaert Financial Services.

Adding to the negative sentiment was a surge of coronavirus cases across the United States and Europe, with the World Health Organization on Sunday, October 25, reporting a 3rd straight day of record new infections globally.

“Rising COVID cases, no US stimulus, and an election next week isn’t exactly the recipe for a strong week for equity markets,” said Craig Erlam, senior market analyst at Oanda trading group.

The Dow closed 2.3% lower, the index’s worst session since early September.

Democrats and Republicans in Washington have tried for months to agree on another massive stimulus package to help the economy recover from the COVID-19 downturn.

But there has been no agreement yet, with Treasury Secretary Steven Mnuchin saying last week “significant differences” remain with Democrats.

House Speaker Nancy Pelosi spoke with Mnuchin on Monday for just short of an hour, and her spokesman said she “remains optimistic that an agreement can be reached before the election.”

Second wave fears

Meanwhile, several countries including Britain, Germany, and France reimposed tough restrictions to prevent COVID-19 from spreading.

“Naturally, growth concerns are at the root of the negative bias since the resurgence of the virus threatens more lockdowns and the lack of a stimulus deal threatens to exclude many struggling businesses and households from the economy,” said analysts at

The coronavirus has so far claimed 1.1 million lives and infected more than 42 million people around the world.

In Europe, Frankfurt’s DAX 30 tumbled 3.7%, weighed down by a 22% drop in the share price of SAP.

The German software giant on Sunday downgraded its outlook for 2020, saying a resurgence in coronavirus cases would weigh on demand from “hard-hit” customers.

London ended the day 1.2% lower and Paris fell 1.9%.

Oil prices slumped around 3%.

“The oil market is sensitive to the perceptions about global demand, and the sharp rise in COVID-19 cases in Europe and the US has spooked traders” as further lockdowns will reduce consumption, said analyst David Madden at CMC Markets UK.

Traders are also keeping tabs on a key policy-setting meeting of China’s Communist Party this week, which is expected to set the course for the world’s second biggest economy for the next several years.

Key figures around 9:15 pm GMT
  • New York – Dow: DOWN 2.3% at 27,685.38 (close)
  • New York – Nasdaq: DOWN 1.6% at 11,358.94 (close)
  • New York – S&P 500: DOWN 1.9% at 3,400.97 (close)
  • London – FTSE 100: DOWN 1.2% at 5,792.01 (close)
  • Frankfurt – DAX 30: DOWN 3.7% at 12,177.18 (close)
  • Paris – CAC 40: DOWN 1.9% at 4,816.12 (close)
  • EURO STOXX 50: DOWN 2.9% at 3,105.25 (close)
  • Tokyo – Nikkei 225: DOWN 0.1% at 23,494.34 (close)
  • Shanghai – Composite: DOWN 0.8% at 3,251.12 (close)
  • Hong Kong – Hang Seng: Closed for holiday
  • Euro/dollar: DOWN at $1.1808 from $1.1859 at 9 pm GMT on Friday, October 23
  • Dollar/yen: UP at 104.84 yen from 104.69 yen
  • Pound/dollar: DOWN at $1.3021 from $1.3043
  • Euro/pound: DOWN at 90.67 pence from 90.89 pence
  • West Texas Intermediate: DOWN 3.1% at $38.60 per barrel
  • Brent North Sea crude: DOWN 3% at $40.50 per barrel


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