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An earlier version of this article incorrectly identified the home sales data due Monday morning. The article has been corrected.
AP
Stocks slumped at the start of Monday trade as the number of daily U.S. COVID-19 infections hit a record at the end of last week and a final agreement on a new round of aid to the economy remained elusive.
What are major benchmarks doing?
The Dow Jones Industrial Average DJIA, -1.29% fell 423.63 points, or 1.5%, to 27,911.94, while the S&P 500 SPX, -0.80% slipped 0.9% to 3,434. The Nasdaq Composite COMP, -0.06% was down 0.4% to 11,502.
The Dow fell 1% last week, ending Friday at 28,335.57, while the S&P 500 saw a 0.5% weekly fall to end at 3,465.39. The Nasdaq dropped 1.1% for the week, closing Friday at 11,548.28. The weekly declines were the first in three weeks for the S&P 500 and Dow and the first in four weeks for the Nasdaq.
What’s driving the market?
COVID-19 infections continued to surge in the U.S. while Europe saw Spain and Italy impose tighter restrictions on activity in an effort to contain a surge in new cases.
The U.S. saw 83,757 new cases of COVID-19 on Friday, topping the previous high of 77,632 seen on July 16, The Wall Street Journal reported, citing data compiled by Johns Hopkins University.
“Rising virus counts and surging numbers in Europe have investors in a cautious mood. They should be careful, as any serious surge will cause a decline in the pace of economic recovery. But a surge won’t last forever. Hopefully, the economic damage will be a slowdown in the pace of recovery and not a reversal,” said James Meyer, chief investment officer of Tower Bridge Advisors.
Several top aides to Vice President Mike Pence, including his chief of staff tested positive for COVID-19 over the weekend. Pence, who has tested negative, will remain on the campaign trail while taking precautions, White House chief of staff Mark Meadows said on Sunday.
House Speaker Nancy Pelosi, D-California, on Sunday told CNN she’s waiting for a “final yes” on a stimulus package from the White House. Talks continued through last week between House Democrats and the Trump administration, but a final agreement remained elusive. Pelosi and Meadows on Sunday each accused the other side of “moving the goal posts” in the negotiations.
Investors are bracing for a deluge of quarterly earnings in the week ahead, including reports from more than a third of the S&P 500, including tech-related highfliers Facebook Inc. FB, -0.17%, Amazon.com Inc. AMZN, +2.24%, Apple Inc. AAPL, +0.83%, Microsoft Corp. MSFT, -0.07% and Google parent Alphabet Inc. GOOG, -0.31% GOOGL, -0.37%.
Also read: Ready for another Big Tech hearing/earnings double-header?
That’s a large chunk of the cohort of tech-related stocks that have been the primary drivers of the stock market rebound from its pandemic low “and their profit picture as well as forward guidance will be crucial to any further rally in the indices,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management, in a note.
“If the high-tech darlings fail to meet the expectations of investors the market could set up for a vicious downward slide as investors will face risk from COVID lockdowns, lack of fiscal stimulus, and peak growth in WFH (working-from-home) stocks,” he said.
See: Stock-market investors brace for busiest week of earnings in October’s final hurrah
On the economic docket, a September reading of new home sales is set for release at 10 a.m. Eastern, with economists looking for sales to rise to an annual pace of 1.033 million from 1.011 million in August.
The Chicago Fed’s national activity index for September came in at a reading of 0.27, down from 1.11 in August.
Which companies are in focus?
- Shares of toy maker Hasbro Inc. HAS slipped over 7% even after reporting third quarter profit and sales that topped expectations and said it expected fourth-quarter deliveries to improve.
- Dunkin’ Brands Group Inc. DNKN, +16.01% shares jumped 16% after the New York Times reported the parent company of the former Dunkin’ Donuts and Baskin-Robbins ice cream was in talks to go private in a sale to private equity-backed Inspire Brands.
- Shares of Otis Worldwide Corp. OTIS, -1.38% fell more than 1% after the elevator and escalator installation company reported third-quarter profit and revenue that surpassed expectations and offered an upbeat full-year outlook.
- Shares of business software companies fell Monday, after Germany-based software giant SAP SE SAP, issued a profit and sales warning. Shares of Oracle, Salesforce.com and Microsoft Corp. slid after the opening bell.
- Shares of HCA Healthcare Inc. HCA, -3.70% fell 2% after the hospital operator reported a third-quarter profit that came up short of expectation.
What are other markets doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.810% fell 3.3 basis points to 0.808%. Bond prices move in the opposite direction of yields.
The Shanghai Composite SHCOMP, -0.82% fell 0.8%, while Japan’s Nikkei 225 index NIK, -0.09% declined 0.1%. The pan-European Stoxx 600 Europe index SXXP, -1.08% fell 0.6%, while London’s FTSE 100 UKX, -0.24% shed 0.1%.
Oil futures were under pressure, with the U.S. crude benchmark CL.1, -2.76% down 2.1% at $39.02 a barrel on the New York Mercantile Exchange Gold was fractionally higher, with the December contract GOLD, +1.15% trading near $1,906 an ounce.
The ICE U.S. Dollar Index DXY, +0.26%, a measure of the currency against a basket of six major rivals, was up 0.2%.
