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Wall Street Remains under Pressure amid Fears of New COVID-19 Lockdowns, Dow Jones Loses 500 Points

UTC by Bhushan Akolkar · 3 min read
Wall Street Remains under Pressure amid Fears of New COVID-19 Lockdowns, Dow Jones Loses 500 Points
Photo: Depositphotos

The United Kingdom is mulling for another round of national lockdown as some medical scientists hinted at necessary measures to arrest the rise in COVID-19 cases. This has caused global investors to reconsider their positions as the road to economic recovery looks longer.

On Monday, September 21, the broader markets remained under pressure amid rising concerns of coronavirus pandemic. Reports suggest that Europe is preparing for another round of lockdown with rising COVID-19 cases. This has caused investors and traders to reconsider their optimism as the road to economic recovery looks longer than expected. On Monday, the Wall Street indices were down: the Dow Jones Industrial Average (INDEXDJX: .DJI) dropped over 500 or nearly 2% closing at 27,147. Also, the S&P 500 (INDEXSP: .INX) registered its fourth consecutive day of drop by sinking 1.2% to 3,281 levels. On Monday, these Wall Street indices also registered a seven-week low. Dow Jones has already corrected 4.5% in September while the S&P 500 corrected 6%.

Data shows that the markets remain in fear as the CBOE Market Volatility index shot to its highest in the last two weeks. Investors remain on the edge over the uncertainty of another fiscal stimulus.

With nearly $3 trillion already sanctioned by the U.S. government as COVID-19 stimulus measures, the Congress has remained at odds over the size of a fifth coronavirus response bill. Moreover, the recent passing of Supreme Court Justice Ruth Bader Ginsburg has made things complicated concerning the release of the stimulus bill.

The technology stocks that helped Dow Jones rally after the March 2020 market crash, also remain under pressure as the whole Wall Street. Over the last three weeks, investors have dumped all the mega-cap tech stock that surged to record valuations this year. Another reason behind the Monday market fall was the latest FinCEN report which names top global banks like Germany’s Deutsche Bank, HSBC, and Standard Chartered for their alleged involvement in suspicious transactions. Thus, markets across Asia and Europe remained under pressure on this news.

U.K. to Consider Another Lockdown

The increase in daily coronavirus cases in the United Kingdom has sparked concerns about another national lockdown. Top scientists in the UK. government said that they are projecting the country’s coronavirus cases to reach 50,000 per day if they don’t act sooner.

U.K’s travel and leisure index hit its worst two-day low since April. Also, stocks of the hotel, airline, and cruise companies showed declines. UK’s benchmark FTSE index corrected 3% on the lockdown fears. Speaking to CNBC, Brad Kinkelaar, global portfolio manager at Barrow Hanley said:

“This is a health-care issue and we still really haven’t made any progress. We still don’t have a vaccine; obviously, there’s still no cure and we’re still figuring out how to deal with the crisis. So it’s not surprising we’ve gone from a market that was essentially pricing in a resumption of normal activity, within a reasonable time frame, to one pricing in the notion that we haven’t figured this out yet”.

Amidst all the fears of coronavirus, investors seem to be moving back to top-performing companies. Apple Inc (NASDAQ: AAPL) shares gained 3% on Monday closing at $110 levels. Tesla Inc (NASDAQ: TSLA) stock also gained a 1.6% closing at $449 levels. On Tuesday, all eyes will be on the electric car maker as investors look forward to the Tesla “Battery-Day” hoping for some progress in the battery tech. However, Tesla CEO Elon Musk hinted that there isn’t much to expect for the time being.

But in another leaked email to Tesla employees, the billionaire CEO hinted for possible record delivery during Q3 2020.

Business News, Indices, Market News, News, Stocks
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