By Will Horner and Juliet Chung
U.S. stocks continued to sell off on Wednesday in what is
shaping up to be their worst week since late March, as rising
coronavirus infections shook investors' confidence in the global
The Dow industrials lost 943.24 points, or 3.4%, to 26519.95,
their fourth losing session in a row and worst day since June
The S&P 500 fell 119.65, or 3.5%, to 3271.03, its third
consecutive down session. The benchmark has slipped more than 8%
from its record closing level in early September and its gains for
the year now stand around 1.3%.
The Nasdaq Composite dropped 426.48, or 3.7%, to 11004.87,
trimming its gains for the year to 22.7%. The stock prices of
Facebook, Google parent Alphabet and Twitter dropped more than 5%
each after their chief executives squared off against U.S. senators
in a congressional hearing over their companies' roles moderating
Stocks have slid lower this week on a raft of uncertainties,
sparking discussion from investors about whether the selloff marked
a buying opportunity or a turn in the market.
Worsening coronavirus case numbers may make more stringent
restrictions imperative across the U.S. and Europe, potentially
dealing a setback to a fragile economic recovery. New U.S. cases
climbed back above 70,000 as states across the country continued to
report high levels of fresh infections. Germany on Wednesday
announced a one-month partial lockdown to stem a resurgence of
"A month ago, the narrative in the market was very much that
lockdowns would be limited and targeted, and so would have a
smaller impact on the economy," said Hugh Gimber, global market
strategist at J.P. Morgan Asset Management. "But now, what we are
seeing is broader concerns that lockdowns might be wider and have a
much wider impact."
The U.S. reported more than 73,200 new cases Tuesday, the second
daily increase in a row, according to data compiled by Johns
Susan Webb, founder and chief investment officer of investment
firm Appomattox, said the market was factoring in fears that
shutdowns would stall 20% of the domestic economy -- that related
to sectors such as travel, entertainment and restaurants -- and hit
the economies of tourism-dependent countries such as Spain and
She also attributed some of the selloff to investors rebalancing
their portfolios as they assess the virus's hold in different
"There is a rotation going on," Ms. Webb said. "A lot of people
are taking some money off the table in U.S. equities where they've
become substantially overweight as Europe has sold off, and there's
a recognition Asia is recovering faster and has gotten control of
Some investors also remain leery about the U.S. election, and
whether delays in counting mail-in ballots or other complications
may lead to uncertainty in the days after the Nov. 3 election. The
S&P 500 remains on track for its worst week before a
presidential election on record.
While uncertainty related to a change of administration has
historically resulted in selloffs, said David Bailin, investment
chief of Citi Private Bank, the uncertainty is particularly
pronounced this time. Among the reasons, he said, is worry "that no
decision is reached in a reasonable period of time" on the election
and that a surprise victory by President Trump would mean continued
global trade wars.
Hopes have also faded that talks between the White House and
Democrats would produce agreement over a fresh package of stimulus
measures before the election, propping up the economic
A rare bright spot Wednesday was General Electric, whose shares
were up $0.32, or 4.5%, to $7.42 after it surprised analysts with a
third-quarter profit. Automatic Data Processing shares jumped
$9.05, or 6.2%, to $155.08 after quarterly profits rose
Microsoft's stock was down $10.57, or 5%, to $202.68 despite the
company saying that sales had jumped thanks to surging demand for
its videogames and cloud-computing services amid the pandemic.
Investors' expectations are too high, said Jeff Mills, chief
investment officer at Bryn Mawr Trust, and may lead to stocks
taking a beating.
"When companies miss or even just meet expectations, you are
seeing negative reactions in the stocks: that tells me valuations
are quite optimistic," said Mr. Mills. "Earnings expectations are
quite high, and if companies underperform, I am not sure the market
will react to that well."
Mr. Bailin said he viewed the selloff as a tailored buying
opportunity, noting that markets would have the ability to look
further out once an effective vaccine is announced. Financial
stocks, emerging markets and shipping all stand to benefit when
stocks get repriced with the pandemic's wane, he said.
Commodity markets were also under pressure with Brent crude, the
international benchmark for oil, falling 5% to $39.12 a barrel.
The yield on the 10-year Treasury edged higher to 0.78%, from
0.778% on Tuesday.
The ICE U.S. Dollar Index, which measures the greenback against
a basket of currencies, gained 0.5% as investors worried about
fresh lockdowns. The dollar typically rises when investors pull out
of stocks due to its status as a haven currency.
European markets have been particularly hard hit as the
Continent grapples with a surge of new cases. The pan-continental
Stoxx Europe 600 fell 2.95% to its lowest level since May.
Investors were also shedding riskier European bonds,
resurrecting worries that Europe will have trouble pushing through
another round of relief measures if the new lockdowns make
increased spending necessary.
Write to Will Horner at William.Horner@wsj.com and Juliet Chung
(END) Dow Jones Newswires
October 28, 2020 17:53 ET (21:53 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.