Stocks tumble as coronavirus lockdowns loom; dollar rises
Stocks sank across the globe on Wednesday on concerns that rising COVID-19 cases in Europe, the United States and elsewhere will get in the way of fragile economic recoveries, while the U.S. dollar rose on safe-haven bids.
Benchmark Treasury yields fell alongside the price of oil and gold was under pressure from the rising dollar.
On Wall Street, the energy and technology sectors of the S&P 500 were among the hardest hit.
“Whether you call it a continuation of the pandemic or a third wave of new case discovery - it is the largest concern,” said Art Hogan, chief market strategist at National Securities in New York.
“Unless and until we get through this pandemic, it is hard for investors to imagine a better economic time.”
The Dow Jones Industrial Average fell 824.06 points, or 3%, to 26,639.13, the S&P 500 lost 98.51 points, or 2.91%, to 3,292.17 and the Nasdaq Composite dropped 334.78 points, or 2.93%, to 11,096.58.
European shares closed at their lowest since late May as Germany and France prepared to announce restrictions approaching the level of the nationwide lockdowns in the spring, as COVID-19 deaths across Europe jumped almost 40% in a week.
The pan-European STOXX 600 index lost 2.95%, touching its lowest level since May. MSCI’s gauge of stocks across the globe shed 2.53%.
Asian shares lost ground after initially showing some resilience, in part due to more limited COVID-19 outbreaks and better recoveries in the region’s major economies.
Emerging market stocks lost 1.18%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.66% lower, while Japan’s Nikkei lost 0.29%.
Concerns over a rising wave of COVID-19 infections played out in currency and bond markets, too, with the euro slumping against the dollar.
The dollar index rose 0.291%, with the euro down 0.37% to $1.1751.
The Japanese yen strengthened 0.15% versus the greenback to 104.29 per dollar, while sterling was last trading at $1.2985, down 0.44% on the day.
Adding to the mood of uncertainty was the Nov. 3 U.S. presidential election.
Former Vice President Joe Biden has enjoyed a consistent lead in the polls over President Donald Trump. Investors cautiously bet on his victory and a possible “blue wave” outcome, where Democrats control both chambers of Congress.