Wall Street Extends Losses As Virus Fears Mount

Wall Street's main indexes closed lower on Monday as concerns about new lockdowns in Europe and possible delays in fresh stimulus from Congress raised fears the US economy faces a longer road to recovery than previously hoped for.

The death of US Supreme Court Justice Ruth Bader Ginsburg also appeared to make the passage of another stimulus package in Congress less likely before the November 3 presidential election, sparking large declines in the healthcare sector.

The Dow shed as much as 900 points and the CBOE Market Volatility index, Wall Street's fear gauge, shot up to its highest level in nearly two weeks. The S&P 500 ended down less than 9 percent from its record high on September 2 after paring losses that had pushed the benchmark almost into corrective territory.

Economic concerns are weighing most heavily on stocks, said David Joy, chief market strategist at Ameriprise.

"Although nothing is being spared, the economically sensitive groups are getting hit the hardest," said Joy, adding that "Washington appears to be no closer to a possible fourth stimulus package."

Congress has for weeks remained deadlocked over the size and shape of another coronavirus-response bill, on top of the roughly US$3 trillion already enacted into law.

Wall Street has tumbled in the past three weeks as investors dumped heavyweight technology-related stocks following a stunning rally that lifted the S&P 500 and the Nasdaq to new highs after plunging in March as economies entered recession.

A new round of business restrictions would threaten a nascent recovery and further pressure equity markets. The first lockdowns in March led the S&P 500 to suffer its worst monthly decline since the global financial crisis.

In contrast to last week's downturn, declines were led by value-oriented sectors such as industrials, energy and financials as opposed to technology stocks .

Airline, hotel and cruise companies tracked declines in their European peers as Britain signaled the possibility of a second national lockdown. Europe's travel and leisure index marked its worst two-day drop since April.

The Dow Jones Industrial Average fell 1.84 percent, to close at 27,148, the S&P 500 lost 1.16 percent, to 3,281 and the Nasdaq Composite dropped 0.13 percent, to 10,779.

JPMorgan Chase & Co and Bank of New York Mellon fell 3.1 percent and 4 percent, respectively, on reports that several global banks moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money. (Reuters)