US stocks suffered their worst selloff in weeks Monday as Wall Street grappled with a nationwide surge in coronavirus infections and continued doubts about another stimulus package.
The Dow Jones industrial average sank as much as 965.41 points, or 3.4 percent, to 27,370.16 in early trading after the US recorded more than 83,000 new COVID-19 cases on both Friday and Saturday — breaking the previous mid-July peak of about 77,000.
The blue-chip index recovered to close down 650.19 points, but it was still the worst day since at least Sept. 3, when it shed about 1,025 points before closing down 807.77 points. The S&P 500 similarly dropped as much as 2.9 percent before clawing back losses to close down 1.9 percent to start the final week of trading before the presidential election. The tech-heavy Nasdaq lost 1.6 percent.
“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,” said Ryan Detrick, chief market strategist for LPL Financial.
Investors appeared unnerved by the new resurgence in the virus — which could do even more damage during the colder fall and winter months — despite news that British drugmaker AstraZeneca’s experimental vaccine provoked an immune response.
Recent spikes in infections have led to renewed lockdown measures in European countries such as the UK and Italy, raising further questions about the pandemic’s economic harm. But White House chief of staff Mark Meadows told CNN on Sunday that the US is “not going to control the pandemic” because COVID-19 is “a contagious virus just like the flu.”
“It is becoming difficult for investors to keep a cool head,” said Milan Cutkovic, market analyst at Axi. “Whether there will be another major sell-off or a continuation of the stock market rally will likely depend on how quickly governments and central banks will react to the latest developments in the COVID-19 pandemic.”
It also looks increasingly unlikely that Congress and the Trump administration will reach a deal on a new stimulus bill to blunt the virus’s economic impact before the Nov. 3 election. Economists say more spending is needed to continue the nation’s recovery from the economic collapse that the pandemic caused in the spring.
House Speaker Nancy Pelosi (D-Calif.) said Sunday that she’s not giving up hope for an agreement, but Senate Majority Leader Mitch McConnell (R-Ky.) has reportedly opposed a large-scale package.
“I think that as we headed to the election, there was a set of fears” about a surge in COVID infections along with a lack of stimulus, Jim Paulsen, chief investment strategist at the Leuthold Group, told The Post. “And there’s just enough news to bring them all together at relatively high market levels.”
“A stimulus package would have been a nice distraction and seen households and businesses through to the new year when everything will be much clearer,” Craig Erlam, senior market analyst at OANDA, said in a commentary. “Alas, investors have far too much faith in lawmakers on Capitol Hill.”
With Post wires
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