Lawmakers’ struggle to introduce an additional stimulus package and fresh spike in coronavirus infection dragged major indexes down on Wednesday.
The Dow Jones Industrial Average (DJI) fell 525.05 points, or 1.9%, to close at 26,763.13 and the S&P 500 closed 78.65 points, or 2.4% lower at 3,236.92. The Nasdaq Composite Index closed at 10,632.99, shedding 330.65 points, or 3%. The fear-gauge CBOE Volatility Index (VIX) increased 6.4%, to close at 28.58. Declining issues outnumbered advancing ones for 7.80-to-1 ratio on the NYSE and a 5.95-to-1 ratio on the Nasdaq favored decliners.
How Did the Benchmarks Perform?
The S&P 500 is now 9.6% lower than its all-time high in September while the Nasdaq is 11.8% down from its September record. This puts the S&P 500 and the Nasdaq 7.5% and 9.7% lower, so far this year. The Dow is 9.4% lower than its record close in February, and 5.9% lower, so far this in 2020.
All the major sectors of the S&P 500 ended in the negative with energy and technology sectors declining the most by 4.6% and 3.2%, respectively for the session. Tech giants Amazon.com, Inc. (AMZN - Free Report) , Apple Inc. (AAPL - Free Report) and Netflix, Inc. (NFLX - Free Report) closed at least 4.1% lower, while Facebook, Inc. (FB - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Microsoft Corporation (MSFT - Free Report) declined 2.3%, 3.5% and 3.3% on Wednesday.
NIKE, Inc. (NKE - Free Report) and Johnson & Johnson (JNJ - Free Report) were the only two stocks to close in the positive territory on Wednesday, recording an 8.8% and 0.2% rise on Sep 23. Nike carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Overall, the S&P 500 posted three new 52-week highs and one new low, while the Nasdaq Composite recorded 34 new highs and 89 new lows.
Investors Continue to Face Headwinds
Benchmarks have pulled backed from recent peaks as health scare, economic and geopolitical factors put investors in jeopardy.
Coronavirus cases are resurging across Europe and in parts of the United States that include Texas, Wisconsin, Oklahoma and Colorado. Earlier this week the United Kingdom had announced new restrictions to curb the coronavirus spread. The country recorded 6,178 new cases on Wednesday.
On the domestic front, prospects of a fresh fiscal stimulus remain foggy as lawmakers struggle to come to an agreement. The death of Supreme Court Justice Ruth Bader Ginsburg also dims the possibility of another fiscal package before the Presidential election. On Wednesday, Federal Reserve Chairman Jerome Powell, said before the Congress that further fiscal stimulus is still required for the economic recovery to continue. Powell also said that they will not consider raising interest rates until inflation is clearly back at 2%.
Business Activity Indicate Weaker Economic Rebound
Per the IHS Markit report on Wednesday, the business activity index slipped to 54.4 in September from 54.6 in August. While, business activities have improved from the steep decline in the second quarter, the figures indicate that the rise is slightly weaker in the month reported.
However, manufacturers continue to outperform service providers as the report states flash services purchasing managers index fell to 54.6 from 55 in August. On the other hand, flash manufacturing index rose to 53.5 in September from 53.1 in the previous month and is a 20-month high. Additionally, new orders have also increased for the second straight month.
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