By Syndication Washington Post, Bloomberg · Sarah Ponczek, Claire Ballentine · BUSINESS, US-GLOBAL-MARKETS
The S&P 500 Index fell 3.5%, the biggest drop since June, amid a surge in covid-19 hospitalizations, especially in the Midwest. Energy shares sank with oil prices, and technology stocks were also among the worst performers, with Microsoft Corp. down after a disappointing forecast. The VIX Index, a measure of expected U.S. equity volatility, climbed to the highest level since June.
The U.S. and European stock benchmarks are both down more than 5% this week as virus cases surge and after American lawmakers failed to agree on an economic aid package before the Nov. 3 election. Analysts are also warning about increased volatility ahead of the presidential vote and in its aftermath, with some saying that a contested outcome is still a worrisome possibility.
"We've obviously got the election hanging over our heads. Then obviously covid accelerating to the degree that it has both here in the U.S. as well as in Europe," said Lori Heinel, deputy global chief investment officer at State Street Global Advisors. "And then you've got the lack of stimulus, which in our estimation is still necessary to get us through this period until we get an ultimate medical solution. It's the triple whammy right now."
The Stoxx Europe 600 Index fell to a five-month low, losing 3% as German Chancellor Angela Merkel reached a deal for a one-month partial lockdown to curb the spread of the virus. After the market closed, France imposed a new nationwide lockdown.
Elsewhere, oil fell sharply on concern raging infections will sap demand. The dollar jumped and gold slumped. An exchange-traded fund tracking junk-rated corporate bonds fell to a one-month low. Bitcoin headed to its biggest drop in a month.
In Asia, stocks fared better. The MSCI Asia Pacific Index edged lower, and markets in South Korea and Shanghai posted modest gains. In China, indicators tracked by Bloomberg showed the recovery continued to display mixed signals while remaining broadly steady in October.
Here are the main moves in markets:
- The S&P 500 Index dropped 2.8% as of 4 p.m. EDT.
- The Stoxx Europe 600 Index decreased 3%.
- The MSCI Asia Pacific Index fell 0.5%.
- The Bloomberg Dollar Spot Index increased 0.6%.
- The British pound declined 0.5% to $1.2981.
- The Japanese yen gained 0.1% to 104.35 per dollar.
- The yield on 10-year Treasurys was little changed at 0.77%.
- Germany's 10-year yield fell one basis point to -0.63%.
- Britain's 10-year yield decreased two basis points to 0.21%.
- West Texas Intermediate crude sank 5.6% to $37.36 a barrel.
- Gold weakened 1.6% to $1,878.26 an ounce.