By Ben Eisen and Anna Isaac
The Dow Jones Industrial Average dropped more than 500 points,
falling in tandem with oil and gold prices and sparking worry among
some investors of further turbulence ahead.
The simultaneous declines across various asset classes spurred
anxiety for some investors and traders who fear a repeat of the
market turmoil of March. U.S. oil prices tumbled 4.4%, and gold, a
traditional haven, fell 2.6% to its lowest close since late
Monday's losses were broad. Ten of the 11 sectors in the S&P
500 dropped, led by economically sensitive groups like materials
and industrials, which both fell 3.4%. The technology sector, which
has driven much of the stock market's remarkable rebound since
March, was the only group to finish the day in the green, up
Stocks charged higher for much of the summer, but sentiment has
soured in September. Investors say they are growing uneasy about
the outlook for the U.S. economy as the prospect of an additional
fiscal-stimulus package looks increasingly remote ahead of a heated
U.S. election campaign season.
"The odds of us getting a stimulus package before the election
are probably as close to zero as we are going to get," said Jim
Tierney, chief investment officer for concentrated U.S. growth at
AllianceBernstein. "The stocks that needed stimulus are getting hit
Shares of airlines, retailers and energy companies -- which have
been battered this year during the pandemic -- were among the
market's biggest losers. Delta Air Lines dropped $3.02, or 9.2%, to
$29.82 while Kohl's fell $1.90, or 8.1%, to $21.50 and Halliburton
declined $1.23, or 8.5%, to $13.22.
Those declines weighed on the major indexes. The Dow industrials
closed down 509.72 points, or 1.8%, at 27147.70. A late-day rally
in tech stocks including Apple and Microsoft helped the Dow pare
its losses in the final hour of trading after earlier declining as
much as 942 points.
The S&P 500 fell 38.41 points, or 1.2%, to 3281.06. The
technology-laden Nasdaq Composite lost 14.48 points, or 0.1%, to
The declines extend the stock market's retreat into a fourth
consecutive week, snapping a summer rally that had propelled the
major indexes near record levels. The S&P 500 is off 8.4% from
its Sept. 2 record, while the Nasdaq Composite is down almost 11%.
The Dow has yet to reclaim its pre-pandemic high and is 8.1% below
its February record.
A closely watched barometer of expected turbulence in U.S.
stocks, the Cboe Volatility Index, jumped Monday to its highest
level in weeks. Some investors said they expect the volatility to
"I don't think we are going to see the lows that we saw in
March. I do believe that overall the market has gotten a little
ahead of itself," said Diane Jaffee, a senior portfolio manager for
relative value strategies at TCW.
Shares of banks, whose profits are particularly sensitive to the
economy, were also down. Wells Fargo dropped $1.09, or 4.3%, to
$24.04, while Morgan Stanley fell $1.72, or 3.4%, to $48.36.
In commodities markets, analysts said the drop in oil prices was
triggered by signals that Libya could renew its supply of oil to
the global market at a time when demand for oil has dropped. Gold,
meanwhile, pulled back as the dollar advanced.
Some investors sought safety in government bonds, pulling the
yield on the benchmark 10-year Treasury note down to 0.670% from
0.694% Friday. Bond prices and yields move in opposite
Investors said they were also unnerved by continuing tensions
between the U.S. and China and the threat of renewed lockdowns in
many places because of higher coronavirus infections.
Over the weekend, China's Ministry of Commerce laid out
penalties for companies and individuals it deems to be "unreliable
entities," including potential restrictions on staffing and
investment in China, curbs on imports and exports, and fines.
The list is aimed at identifying foreign entities and
individuals that could harm Chinese interests. No names have thus
far been disclosed. The development is likely to add another stress
point to the already strained relations between the U.S. and China,
as it signals Beijing may step up retaliatory measures, investors
"There's the broader macro risk that this might be China
starting to become more combative in its use of sanctions," said
Edward Park, deputy chief investment officer at Brooks Macdonald.
"That wasn't really on the markets' radar."
Elsewhere, shares of Oracle rose $1.07, or 1.8%, to $60.82 after
President Trump said he has agreed in concept to a deal under which
Chinese-owned video-sharing app TikTok will partner with Oracle and
Walmart to become a U.S.-based company. The negotiations have
stirred debate over national security and the future of the
Shares of Illumina dropped $25.37, or 8.6%, to $270.13. The
maker of machines that sequence genes will pay $7.1 billion in cash
and stock for a developer of a long-sought blood test that promises
to detect canc er early.
Nikola's stock plummeted $6.61, or 19%, to $27.58 as the company
said founder and Executive Chairman Trevor Milton would step down
from the electric-truck startup amid allegations from a short
seller that he and the company had made false statements to
Overseas, the pan-continental Stoxx Europe 600 fell 3.2%.
Coronavirus cases have been rising across major European economies,
leading to speculation that governments will be forced to implement
new lockdowns that will curtail business and social activity across
"The worry is definitely that we're going to see restrictions on
economies and that's going to have a big negative impact going
forward," said Altaf Kassam, head of investment strategy for State
Street Global Advisors in Europe. "There's the noise from
politicians across Europe on the threat of further lockdown, that
we've reached a tipping point on the rate of infections."
Write to Ben Eisen at firstname.lastname@example.org and Anna Isaac at
(END) Dow Jones Newswires
September 21, 2020 17:15 ET (21:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.