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Worst Sell-Off Since September: Dow Jones Crashes 650 Points amid COVID-19 Concerns

UTC by Bhushan Akolkar · 3 min read
Worst Sell-Off Since September: Dow Jones Crashes 650 Points amid COVID-19 Concerns
Photo: Depositphotos

Volatility has once again ensured the stock markets which are facing a double whammy with the rising coronavirus cases on one end and the halting stimulus talks. Markets are losing confidence with a gloomy outlook ahead.

On Monday, October 26, markets took a nose dive amid rising concerns with coronavirus and the stimulus package discussion coming to a halt. The Dow Jones Industrial Average dropped 2.29% or 650 in its biggest single-day sell-off since September. DJIA (INDEXDJX: .DJI) closed the day at 27,685 levels.

Other indices like the S&P 500 (INDEXSP: .INX) crashed 1.86% while the Nasdaq Composite (INDEXNASDAQ: .IXIC) tanked 1.64%. Just a week before the U.S. Presidential Elections, market volatility ensues with the rising COVID-19 cases once again.

The United States is preparing for another wave as the daily cases have jumped by an average of nearly 70,000 cases over the last seven days. As per data by the Johns Hopkins University, the U.S. registered over 60,000 on Sunday alone. On the other hand, the ongoing stimulus package talks between the Republicans and the Democrats haven’t reached fruition. Putting the blame on the White House for the stalled talks, House Speaker Nancy Pelosi, D-Calif., expressed her opinion the following way.

She along with the Democrats “stressed the importance of testing, but the Administration has never followed through. The Republicans’ continued surrender to the virus – particularly amid the recent wave of cases – is official malfeasance.” However, she goes on to add that “we cannot accept the Administration’s refusal to crush the virus, honor our heroes or put money in the pockets of the American people.”

Markets Are Losing Confidence Again

After a quick recovery post the March 2020 crash, markets are once again losing confidence with the rising coronavirus cases. Parts of Europe are seeing a recent surge in cases with some countries mulling for another lockdown. The United States is also facing a recent surge in the cases. Ryan Detrick, chief market strategist at LPL Financial said:

“The double whammy of a stalled stimulus bill and new highs in cases is a harsh reminder of the many worries that are still out there. Most of the recent economic data has been strong, but when you see parts of Europe going back to rolling shutdowns, it reminds us this fight is still far from over.”

As a result, fund managers have considered reducing risks in recent years. Frank Rybinski, chief macro strategist at Aegon Asset Management told CNBC:

“To me, this is Phase 2 of the pandemic. “To me, this is Phase 2 of the pandemic. Until we get some eradication of the virus, it’s going to be like a gray cloud” over the market.

Julian Emanuel, a strategist at BTIG, also noted:

“The market is likely to drift lower near term (first SPX support at 3,209) in the face of Stimulus disappointment … virus resurgence, and intensifying election uncertainty”.

Dow Jones, S&P 500 Down: Major Movers of the Stock Market during Sell-Off

European software giant SAP SE (NYSE: SAP) registered a massive 20% dip in its stock price after it suggested a gloomy picture ahead since businesses have been holding from further spending. SAP cuts its earnings outlook for 2020. Following SAP, other software giants like Microsoft Corporation (NASDAQ: MSFT) and Oracle Corporation (NYSE: ORCL) also corrected 2.8% and 4% respectively.

On Monday, the New York Times reported that donut-maker Dunkin’ Brands Group Inc (NASDAQ: DNKN) is in talks of getting acquired by a private equity firm in a deal worth nearly $9 billion. The DNKN stock price jumped nearly 15% post the news. On Monday, the yield for the ten-year Treasury Bond tanked 4% to 0.808% after straight seven days of gains.

Several companies are likely to report their quarterly earnings ahead this week. All eyes will be on tech giants like Amazon.com Inc (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG).

Business News, Indices, Market News, News, Stocks
Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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