Wall Street routed on Wednesday on concerns of global economic recovery as new coronavirus cases spiked in the United States and Europe. Moreover, tighter than-expected upcoming U.S. presidential election also resulted in volatile trading. All three major stock indexes plunged yesterday.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) plummeted 3.4% or 943.24 points to close at 26,519.95, marking its fourth straight negative close. Notably, 29 components of the 30-stock index ended in the red while 1 finished in green. This was the Dow's worst single-day performance since Jun 11. The index is 7.2% away to become green year to date.
However, the tech-laden Nasdaq Composite finished at 11,004.87, tumbling 3.7% or 426.48 points due to disappointing performance by large-cap technology stocks. This was the tech-heavy index's worst single-day performance since Sep 8.
Meanwhile, the S&P 500 tanked 3.5% or 119.65 points to end at 3,271.03, marking its third straight negative close. This was the broad-market index's worst single-day performance since Jun 11. The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) plunged 4.2%, 4.2% and 3.9%, respectively. Notably, all eleven sectors of the benchmark index closed in negative zone.
The fear-gauge CBOE Volatility Index (VIX) was up 20.8% to 40.28, its highest since Jun 15. A total of 11 billion shares were traded on Wednesday, higher than the last 20-session average of 9 billion. Decliners outnumbered advancers on the NYSE by a 10.08-to-1 ratio. On Nasdaq, a 6.28-to-1 ratio favored declining issues.
Resurgence New Coronavirus Cases
According to the Johns Hopkins University, daily coronavirus cases in the United States have risen a record high by an average of 71,832 over the past seven days. Per CNBC, more than 20 states reported record-high numbers of average daily new cases. Moreover, per the data of the COVID Tracking Project, new cases are rising by 5% or more in 36 states.
In Europe, German officials agreed to impose a four-week partial lockdown and the French government announced a nationwide lockdown in order to curb resurgence of new COVID-19 infections. The European Commission President Ursula von der Leyen said that the European Union, the U.K., Norway, Switzerland and Iceland alone accounted for 1.1 million cases over the past seven days. Russia also saw a spike in new COVID-19 cases.
Upcoming U.S. Presidential Election
Various political experts have predicted that the upcoming presidential election will be a closely contested one. Historically, stock markets have remained volatile in the month before the election. Market participants generally choose to hold cash instead of investing in risky assets like equities while assessing the economic and financial consequences of the election result.
Reopening Stocks Suffer
The reopening stocks, especially the travel stocks, have suffered the most as a result of a fresh spike in coronavirus cases globally. Shares of Royal Caribbean Group RCL, Norwegian Cruise Line Holdings Ltd. NCLH, Carnival Corporation & Plc CCL and United Airlines Holdings Inc. UAL plunged 7.4%, 9.1%, 10.6% and 4.6%, respectively. United Airlines Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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