Concerns about spike in coronavirus cases raised possibilities of new lockdown measures in Europe, and a lack of progress towards another round of fiscal stimulus in America led to sharp sell-off on Monday. Major benchmarks closed in the negative territory with the S&P 500 posting its fourth straight daily loss for the first time since February.
The Dow Jones Industrial Average (DJI) fell 509.72 points, or 1.8%, to close at 27,147.70 and the S&P 500 slid 38.41 points, or 1.2% to close at 3,281.06. The Nasdaq Composite Index closed at 10,778.80, shedding 14.48 points, or 0.1%. The fear-gauge CBOE Volatility Index (VIX) increased 7.6%, to close at 27.78. Declining issues outnumbered advancing ones for 5.94-to-1 ratio on the NYSE and a 4.25-to-1 ratio on the Nasdaq favored decliners.
How Did the Benchmarks Perform?
Of the 11 major sectors of the S&P 500, only the technology sector closed in the green, rising 0.8%. Technology companies that have been hit hard so far in September rebounded slightly on Monday with shared of Apple Inc. (AAPL - Free Report) and Netflix, Inc. (NFLX - Free Report) rising at least 3%. Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Monday’s sell off was led by the materials, industrials and energy sectors that declined more than 3.3% for the day. The broader index posted its fourth straight daily loss for the first time since February and ended less than 9% lower from its record high on Sep 2. The index also pared losses that had pushed the benchmark almost into corrective territory.
Overall, the S&P 500 posted one new 52-week high and one new low, while the Nasdaq Composite recorded 20 new highs and 54 new lows.
Spike in COVID-19 Cases Across Europe Spark Fear
Rise in new coronavirus cases have sounded alarm bells across Europe leading officials to consider another national lockdown to stop an increase in infections. Top government officials and scientists in the United Kingdom believe that the country’s infection rate could reach 50,000 per day if no further actions are taken.
Madrid’s administration has already ordered a lockdown in some areas. In London, Mayor Sadiq Khan along with the local officials will propose a new round of restrictions to stem the coronavirus spread. Reports suggest that pubs in England could shutdown early, while bars and restaurants in hard-hit areas could be shut completely to tackle rising infections.
Stocks that could be hit hardest from another lockdown declined on Monday. Shares of airline, hotel and cruise companies in the Unites States also declined as their European peers signaled the possibility of slump in business activities due to possible lockdown. The European travel and leisure index also marked its worst two-day drop since April. Shares of Delta Air Lines, Inc. (DAL - Free Report) , American Airlines Group Inc. (AAL - Free Report) and Carnival Corporation & Plc (CCL - Free Report) closed 9.2%, 7.4% and 6.7% lower on Monday.
New Coronavirus Stimulus Bill Foggy
Supreme Court Justice, Ruth Bader Ginsburg’s death on Sep 18 could complicate negotiations for a new coronavirus stimulus bill. While the US House of Representatives remained stalemate after provisions from the previous stimulus bill expired in July, the vacancy could lead to a bitter nomination process ahead of the Presidential election.
President Donald Trump said that he would announce a nominee by the end of this week. However, the Democrats claim that the winner of the Presidential Election on Nov 3 should choose the nominee. Earlier in 2016, Republican-led Senate had blocked a nomination by Barack Obama, following the death of Associate Justice Antonin Scalia on same grounds.
Illicit Funds Movement Allegation Put Banks Under Pressure
On Monday, financial stocks came under pressure after reports highlighted that global banks moved illicit funds over the past two decades despite warnings from U.S. officials. Reports of a new investigation by BuzzFeed and the International Consortium of Investigative Journalists said that the banks’ internal compliance officers had flagged a total of more than $2 trillion in transactions between 1999 and 2017 as possible money laundering or other criminal activity. Though these leaked suspicious activity reports that were cited as confidential documents submitted by banks to the U.S. government do not indicate wrongdoing, it led to broad market sell-off yesterday.
Per the report, Deutsche Bank Aktiengesellschaft (DB - Free Report) appears to have facilitated a $1.3 trillion of suspicious money and JPMorgan Chase & Co.’s (JPM - Free Report) reports showed $514 billion. HSBC Holdings plc (HSBC - Free Report) , Standard Chartered PLC (SCBFF - Free Report) and The Bank of New York Mellon Corporation (BK - Free Report) were among the other banks mentioned in the investigation.
Shares of Deutsche Bank, JPMorgan, Standard Chartered and Bank of New York Mellon closed 8.5%, 3.1%, 5.8% and 4% lower respectively, for the session. HSBC stock in particular tanked 5.5%, and touched a 25-year low.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
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