The lack of a new stimulus deal and surging coronavirus cases are having a negative effect on the stock market, which dropped 650 points on Monday (Oct. 26), The Wall Street Journal (WSJ) reported.
The drop came with major indexes opening low and declines accelerating late into the afternoon. Twenty-nine of the 30 Dow stocks saw declines, marking one of the steepest lows in the Dow since Sept. 3, WSJ reported, including especially catastrophic losses in travel and leisure firms. Royal Caribbean saw a drop of 9.6 percent, while United Airlines decreased 7 percent and Marriott International fell 5.6 percent. Travel-related companies have been among the hardest hit industries in the pandemic.
Meanwhile, the S&P fell 64.42 points, or 1.9 percent, hitting 3400.97, WSJ reported, while the Nasdaq fell 189.34 points, or 1.6 percent, to 11358.94. All three of the aforementioned indexes have fallen over 5 percent since earlier this year.
The energy sector was the weakest performer on Monday, dropping 3.5 percent.
But corporate earnings are expected to rebound in the last few months of the year with a return to growth in 2021, WSJ reported.
The chances of a new stimulus package from Congress are slim in the near future, particularly grim before next week’s presidential election, according to WSJ. And the average number of daily coronavirus cases reported over the past week reached a new record of 68,767 on Monday. The expectation by scientists that cases will also continue to worsen as the U.S. heads into colder weather has arrived early. Concerns about tighter lockdown restrictions and fresh economic wounds have roiled the markets.
The idea that adding more stimulus funds would boost the economy isn’t a new one. Federal Reserve Governor Lael Brainard said it could be the key to making the economy “broad-based and inclusive” and not passing a plan could be the biggest threat to the economy’s recovery. Democrats and Republicans have been attempting to agree on a deal for the last several months.