U.S. stocks tumbled on Monday in thin trade, with the S&P 500 posting its biggest daily decline in four weeks, as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the U.S. economic recovery. The TSX was also under pressure, though losses were less harsh than what was seen on Wall Street, with Canada’s main benchmark index falling 1.38%.
The United States, Russia and France set daily records for coronavirus infections. The number of hospitalized Americans with COVID-19 jumped to a two-month high. In Canada, the seven-day average for cases has reached a new record high.
Travel-related stocks, vulnerable to COVID-19 related curbs, fell sharply. The S&P 1500 airlines index, as well as Air Canada, fell about 6% and cruise line operators Carnival Corp and Royal Caribbean Cruises Ltd fell more than that.
“Fears about COVID-19 resurgence and the continued failure to reach a fiscal policy package between Republicans and Democrats has investors unnerved,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“Those are the two biggest drivers of today’s decline.”
The S&P/TSX Composite Index closed down 224.53 points to 16,079.55. The energy sector led decliners with a drop of 3.34%. The decline came not only as oil prices fell more than 3%, extending last week’s losses as coronavirus cases continued to surge in the United States and Europe, but also amid a rough reception for Cenovus Energy’s takeover of Husky Energy announced over the weekend. Cenovus shares lost 8.40% as some analysts saw the $3.8-billion value of the stock-based takeover as “excessive.” Husky gained almost 12%.
For the S&P 500, the energy index tracked a more than 3% fall in oil prices. The economically sensitive industrials and financials also posted steep declines among S&P sectors.
The big price moves came as trading volume was substantially less than the daily October average.
“From our clients' perspective, the uncertainty is causing them to stay on the sidelines. So you’re seeing a lack of buyers, generally speaking,” said King Lip, chief strategist at Baker Avenue Asset Management in San Francisco.
U.S. House of Representatives Speaker Nancy Pelosi spoke with Treasury Secretary Steven Mnuchin about COVID-19 relief legislation.
Wall Street’s fear gauge hit its highest in more than seven weeks as uncertainty grew over the Nov. 3 election. Some 60 million Americans have voted in a record-breaking early turnout as Trump and Democratic challenger Joe Biden entered their final week of campaigning.
It is also one of the busiest weeks of the third-quarter earnings season that will see results from mega-cap U.S. tech firms including Apple Inc, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc.
The tech sector is among the only three sectors apart from healthcare and consumer staples expected to post an increase in profit from a year earlier.
Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5% have beaten Wall Street expectations, according to Refinitiv data.
Unofficially, the Dow Jones Industrial Average fell 647.1 points, or 2.28%, to 27,688.47, the S&P 500 lost 64.15 points, or 1.85%, to 3,401.24 and the Nasdaq Composite dropped 189.35 points, or 1.64%, to 11,358.94.
Declining issues outnumbered advancing ones on the NYSE by a 6.23-to-1 ratio; on Nasdaq, a 4.52-to-1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and two new lows; the Nasdaq Composite recorded 28 new highs and 52 new lows.
Reuters, Globe staff