Wall Street Hits Near 7-Week Low on Virus Fears, Stimulus Fog

Marco Green
September 21, 2020

The U.K.is reportedly considering another national lockdown to stop an increase in coronavirus cases.

One reason for the recent poor performance of the USA stock market is gradual rotation out of technology stocks (such as Amazon and Tesla) due to concerns about valuations of some of the companies that powered the huge rally we have witnessed since March 23. Share of Carnival Corp. were off by 4%. Southwest Airlines and Delta Air Lines fell 4.6% and 7.2%, respectively.

Talks surrounding a second U.S. stimulus bill were in focus before the open on Monday as the passing of Supreme Court Justice Ruth Bader Ginsburg, and the nomination process for her successor ahead of the election, was seen as potentially throwing a spanner in the works and delaying the bill until sometime after 3 November.

Donald Trump said he would announce his nomination for Bader Ginsberg's vacant seat by Saturday. Republicans and Democrats have been in a stalemate since July after provisions from the previous stimulus bill expired. Apple, Microsoft and Amazon were all off by at least 1%.

Nikola Corp crashed 17.9% after its founder Trevor Milton stepped down as executive chairman following a public squabble with a short-seller over allegations of nepotism and fraud.

Shares of GM, which recently took a 11% stake in Nikola, fell nearly 4% in pre-market trading. Shares of Deutsche Bank dropped 8.3%, while JPMorgan Chase fell more than 2.8%.

Tensions between Washington and Beijing were also in focus, with the Chinese Ministry of Commerce releasing long-awaited provisions on its so-called "unreliable entity list", a day after the U.S. instituted its ban on WeChat and TikTok.

"When the market ran up, its biggest reason was people wanted to get in before it was even higher".

At 10:45 a.m. ET the Dow Jones Industrial Average was down 853 points, or 3.09%, at 26,804, the S&P 500 was down 84 points, or 2.53%, at 3,235, and the Nasdaq Composite was down 246 points, or 2.28%, at 10,547. That marks the market's longest weekly slide since 2019. The S&P 500 is off five percent so far in September, while the Nasdaq Composite is in correction territory, down more than 10 percent from its recent record high. It's been a rough month so far for the market and technology shares. For the week, the Dow lost less than 0.1%, the S&P 500 was down 0.6%, and the Nasdaq fell 0.6%.

While shares initially rose on the back of reasonable economic data, the anticipation of a dovish statement from the Fed (which happened and then left investors unhappy), positive vaccine news, and M&A activity, the gains were eaten up later in the week as tech stocks came under renewed pressure and the unhappiness with the Fed continued.

Other reports by Click Lancashire

Discuss This Article