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Dow Tumbles More Than 800 Points As Coronavirus Cases Surge

With Election Day around the corner and still no visible sign of getting a fiscal stimulus, investors stay anxious as they fear the rise in the COVID-19 cases could lead to yet another halt in the recovery of the global economy.

According to data compiled by Johns Hopkins University, U.S hit a massive amount of 71,832 daily average record of coronavirus cases in the last week. Moreover, according to data from the COVID Tracking Project, the rate of hospitalization of the COVID affected patients has increased by 5% or more in three dozen states.

A similar trend has been seen in Europe as a reaction to which German Chancellor Angela Merkel has called for a limited lockdown, while France President Emmanuel Macron is set to give a TV address to announce further measures to deal with the disastrous situation.

As the news of the new restrictions is awaited, the European markets observed volatility, and the pan-European Stoxx 600 closed down by 3.1% while Germany’s blue-chip DAX index decreased by 4.4%. France’s CAC went tumbling down by 3.7%.

Early Wednesday, as the market opened, stocks sunk sharply with the Dow Jones falling by 490 points, the Nasdaq Futures by 126 point, and the S&P 500 futures dropping by 47.75 points. Crude and gold also went down by $1.84 and $17.3 respectively.

On the other hand, the multinational parcel company, UPS, and the giant conglomerate, General Electric, reported third-quarter results that were beyond expectations. UPS announced adjusted earnings of $2.28 per share on the revenue of $21.2 billion, while GE posted a free cash flow of $514 million when the expectations were to have an outflow of $960 million.

Later in the day, the already hit airline industry announced more job cuts. As the industry continues to suffer owing to the pandemic, Boeing (BA) reported that it would be downsizing the workforce to 130,000 by the end of 2021. The company had already let go of thousands of employees and the latest announcement is expected to impact another 7,000 jobs. Owing to the additional lockdowns that are set to be placed, Delta Air Lines shares slid by 4.3% and Royal Caribbean lost 4.2%.

The three major indices continued to add up losses when mid-morning, Dow Jones dropped by 820 points or 3% due to a drop in Dow Inc. and Visa shares. The S&P 500 fell by 2.9% as energy and IT sectors dropped. The Nasdaq was off by 3% as Big Tech stocks lagged. The three indices head towards their worst day since September 3, September 8, and September 23, respectively.

As for the Big Tech companies, Facebook, Twitter, and Alphabet, each dropped on Wednesday afternoon as the CEOs of each of the companies were questioned by the senators over their content moderation practices. Alphabet and Twitter were off by 5% and 4.9% respectively, while Facebook took a hit to drop down by 4.8%.

Following the uncertainty in the stock markets, global market strategist at StoneX, Yousef Abbasi, said, “Investors’ hopes that the COVID pandemic would not force further stringent mitigations measures and/or potential wholesale lockdowns that would push global economies back into ‘low-consumption mode’ appear to be coming under challenge. Avoiding these stringent measures has been a major tenant of the bullish thesis, particularly for those looking to value stocks and for a steeper yield-curve.”

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