The Journal Gazette
 
 
Tuesday, September 22, 2020 1:00 am

Fear infects global markets

Investors worrying over virus restrictions, aid

Associated Press

NEW YORK – Wall Street slumped Monday as markets tumbled worldwide on worries about the pandemic's economic pain, though the S&P 500 had pared its losses by the end of the day.

The drops began in Asia as soon as trading opened for the week, and they accelerated in Europe on worries about the possibility of tougher restrictions there to stem rising coronavirus counts. In the U.S., stocks and Treasury yields weakened, while prices sank for oil and other commodities that a healthy economy would demand.

The S&P 500 fell 38.41 points, or 1.2%, to 3,281.06. It extends the index's losing streak to four days, its longest since stocks were selling off in February on recession worries. But a last-hour recovery helped the index more than halve its loss of 2.7% from earlier in the day.

The Dow Jones Industrial Average fell 509.72, or 1.8%, to 27,147.70 after coming back from an earlier 942-point slide. The Nasdaq composite slipped 14.48, or 0.1%, to 10,778.80 after recovering from a 2.5% drop.

Wall Street has been shaky this month, and the S&P 500 has dropped 8.4% since hitting a record Sept. 2 amid a long list of worries for investors. Chief among them is fear that stocks got too expensive when coronavirus counts are still worsening, Congress is unable to deliver more aid for the economy, U.S.-China tensions are rising and a contentious U.S. election is approaching.

Investors should expect the stock market to stay volatile, perhaps through the November elections, as they wait for these questions to shake out, said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management.

Monday's selling was exacerbated by worries about the possibility of more business restrictions in Europe, particularly as the United States heads into flu season, Draho said, and “some investors may be stepping aside.”

David Joy, chief market strategist at Ameriprise Financial, noted how Monday's sharpest drops were concentrated in areas of the market most closely tied to the economy's strength, such as energy companies and raw-material producers.

“It seems to be a broader expression of worry about the economy,” he said.

Investors are also worried about the diminishing prospects that Congress may soon deliver more aid to the economy. Many investors call such support crucial after extra weekly unemployment benefits and other stimulus expired. But partisan disagreements have held up any renewal of what's known as the CARES Act.

“The stimulus money from the CARES Act, the impact of that, is running off, and there doesn't seem to be any urgency in Washington to get another package together,” said Joy of Ameriprise Financial.


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