CNN Business/Matt Egan
Wall Street is spooked, but it should have seen the fall coronavirus surge coming
For months, Wall Street was sleepwalking towards what every health expert said would be a terrible fall and winter. Now, a harsh reality is setting in.
Coronavirus infections are surging in the United States and much worse in Europe. Investors are suddenly spooked. The Dow plunged roughly 800 points, or 3%, Wednesday. That leaves the index down more than 1,600 points on the week.
The big fear is how much worse the pandemic will get — and whether government restrictions to fight the spread will derail the fragile economic recovery. Those concerns are magnified by the risk of post-election chaos and Washington’s failure to reach a deal on a stimulus package. That means the economy is entering this precarious period without a safety net.
“Coronavirus is coming back with a vengeance. And that’s leading to a sell-first, ask-questions-later mentality,” said Ryan Detrick, chief market strategist at LPL Financial.
None of this should be shocking. The leading health experts have long warned that coronavirus infections would spike as people move indoors during the cooler weather this fall and winter. Yet the S&P 500 was still trading near record highs just two weeks ago.
“I think the market missed this one. Investors were almost thinking we were going to avoid it. Now the market is being caught flatfooted,” said Detrick.
That market optimism was driven by easy money from the Federal Reserve, hopes for federal relief from Congress and progress on a vaccine.
“Nothing is to be gained by pretending that the pandemic and the economic pain it has caused are coming to a swift end,” David Kelly, chief global strategist at JPMorgan Funds, wrote in a report to clients.
Gold Prices Set To Explode If Dems Take U.S. Senate And House, History Says
If the forthcoming election results in a Democrat sweep of the U.S. Senate and House of Representatives then gold prices look set to explode, history shows.
A recent report from State Street Global Advisors says that when the Democrats control the Congress, then gold has done far better than when there is a split with one party controlling the Senate and the other the House.
“On average, a Democratically controlled Congress appears to historically have been more supportive of gold (20.9%),” the report states.
That’s almost six times (3.5%) the average gains gold prices have seen when Congress is split. Under a Republican-controlled Congress gold has gained 3.9% on average, State Street says.
Looking at the current polls, with the Democrats way ahead of the GOP, investors should be considering a hefty helping of the yellow metal in their portfolio.
Based on recent gold prices of $1,872 a troy ounce investors could expect the price of the yellow metal to surge as high as $2,263, if the Democrats sweep Congress and gold’s price history repeats. If that does happen then expect the SPDR Gold Shares Trust (GLD) exchange-traded fund, which holds bars of solid bullion, to perform similarly.
Brace for a ‘fairly scary time’ on Wall Street, Wells Fargo warns
Wells Fargo Securities’ Michael Schumacher has a message for investors: Buckle up.
The firm’s head of macro strategy warns Wednesday’s market turbulence may just be a preview of what’s ahead.
“When you think about the U.S. elections, Covid worsening [and] all sorts of other news items coming out in the next couple of weeks, it could be a fairly scary time,” Schumacher told CNBC’s “Trading Nation.”
On Wednesday, the S&P 500 and Dow had their worst days since June 11 due to growing fears over rising coronavirus cases across the nation. There’s speculation they could spark new containment measures and closures.
While jitters over rising virus cases drove the latest sell-off, Schumacher warns election uncertainty has the potential to pummel stocks even more.
“One thing we pointed to for a while at Wells Fargo is the chance the election results are delayed. In that case, it’s almost certainly risk-off. So, a lot of reasons to be concerned over the next week to ten days,” he said. “Right now, it seems the virus has the upper hand, but it’s a very close call. And, frankly, these things are intertwined.”
CNN Business/Anneken Tappe
Stocks tumble as Covid-19 cases surge and stimulus is nowhere to be found
Wall Street took a dive on Monday as coronavirus, Washington intransigence and earnings weighed on the market. All of this is creating a cocktail of uncertainty that the market doesn’t like one bit.
US stocks sold off all day, from the opening to the closing bell, and the selloff just gathered pace during the trading session.
The Dow (INDU) closed down 650 points, or 2.3%, after falling as many as 965 points at its low point. All Dow stocks closed in the red except Apple, which eked out a .01% gain. It was the Dow’s worst day since September 3.
The S&P 500 (SPX) — the broadest measure of the US stock market — closed down 1.9%, making it the index’s worst day since late September.The tech-heavy Nasdaq Composite (COMP), which had briefly bounced back from its lows in the morning, finished down 1.6%.
Energy, industrials and financial stocks are among the worst performers of the day. Those sectors that are more sensitive to the economy and the pace of the recovery felt more pain Monday, said Eric Freedman, CIO at US Bank. But there were losses across all sectors.