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Monday, June 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

As Bad as It’s Been: Dow Sheds 650 Points Amid Record Virus Spread

Fears of a bona fide second wave of Covid-19 — and still no stimulus plan in sight — sent markets into a free fall on Monday. 

MANHATTAN (CN) — Markets plunged on Monday as renewed fears of a massive second wave of Covid-19 take shape.

The Dow Jones began the day sliding steadily downward, tanking 950 points around midday, and looked to be on pace for its worst day in months. The Dow recovered slightly by the end of trading, losing 650 points, or about 2.3%. The S&P 500 and Nasdaq had similar trajectories, dropping 1.8% and 1.6%, respectively. 

The fall in the stock market mirrored the rise in Covid-19 cases, which spiked over the weekend to new heights. On Saturday, 82,000 new cases were reported nationwide, the highest one-day total since the pandemic began.

In total, more than 43 million have contracted Covid-19 worldwide, according to data compiled by Johns Hopkins University. In the United States alone, 8.6 million have been confirmed infected while about 225,000 have died. More than 1.1 million people have died from the virus.

Over the weekend, World Health Organization chief Tedros Adhanom Ghebreyesus said that the northern hemisphere faced “a dangerous moment” due to the increase in cases over the last several days. 

In the United States, 41 states have reported a dramatic increase in cases, with a rash of cases in the Southwest and Midwest reportedly driving much of the increase.

The virus has now infected several key members of Vice President Mike Pence’s staff, but President Trump made the contradictory claim that the U.S. was “rounding the turn” as his administration scrambles to contain the political fallout.

Over the weekend, Chief of Staff Mark Meadows said during a heated interview on CNN that “we’re not going to control the pandemic,” and that the administration was focused on vaccines, therapeutics, and “other mitigation areas.”

The Biden campaign jumped on Meadows’ comment, saying it was not a slip of the tongue but rather “a candid acknowledgement” of President Trump’s strategy for the virus: “to wave the white flag of defeat and hope that by ignoring it, the virus would simply go away.”

Investors’ hopes for a stimulus package also have been strained, as lawmakers on Capitol Hill still remain at arm’s length on an agreement.

In an investor’s note Monday morning, Peter Boockvar of Bleakley Advisory Group wrote that there is “certainly no sense that we are any closer to some fiscal deal before the election,” despite overtures by the White House to present a counteroffer to House Speaker Nancy Pelosi.

“Combine that with the Covid spread inflecting up again and we have what we have this morning,” Boockvar wrote. “I’m less worried about the sharp pick up in the spread because it reminds people to wear masks and be responsible and then the numbers come back down again. Unfortunately, we have a whole winter to get thru but hopefully we’re on the cusp of good vaccine news.”

Abroad, markets portended a drop on Wall Street earlier in the day. While Asian markets were mixed, with Shanghai’s index dropping the most at 0.8%, Europe fared much worse due to record increase in daily cases in France and a new curfew in Spain.  

Germany’s DAX fell 3.7%, while indices in France and England inched toward 2% losses for the day. The pan-European Stoxx 600 fell 1.8%.

“During the summer months, there was a sense of optimism in the markets as economies were being reopened and there was a view that governments had a handle on the crisis,” wrote David Madden, a senior analyst at CMC Markets. “Now there is a feeling that countries are struggling to contain the health emergency, and the announcement of curfews and localized lockdowns adds to the view that things are going to get worse before they get better.”

The fear now, says James Meyer of Tower Bridge Advisors, is the rise in cases is more than just a blip on the radar and could actually be following the model of the Spanish flu epidemic of the early 20th century. That virus started in early 1918 and had multiple resurgences, particularly that fall.

“In some European countries, weekly cases are now 2-3X what they were last spring,” he wrote. “While hospitalization rates are rising, they are not yet back to spring peaks and, thankfully, deaths still lag. But if the spike gets larger, both hospitalizations and deaths will follow.”

But Meyer noted that “a repeat of the stock market crash of the spring isn’t in the cards this fall,” noting that the 35% drop in value in the spring was probably an overcorrection. “It can be argued that the recovery didn’t fully discount a large second wave,” he wrote. “We are already seeing 4th quarter growth forecasts pulled back. But everyone still expects Q4 to be better than Q3. So we continue to move in the right direction.”

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Categories / Economy, Financial

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