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March 9, 2020, New York City. Timothy A. Clary/AFP via Getty Images

S&P 500 sinks 3.5% as surging virus cases threaten shutdowns

Associated Press Oct 28, 2020
March 9, 2020, New York City. Timothy A. Clary/AFP via Getty Images

Stocks around the world are tumbling Wednesday on worries the worsening pandemic will mean more restrictions on businesses and drag down the economy.

The Dow Jones Industrial Average dropped 943 points Wednesday as surging coronavirus cases in the U.S. and Europe threaten more business shutdowns and pain for the economy. The S&P 500 dropped 3.5%, its third straight loss. The index has now given up 5.6% so far this week and is on track for its biggest weekly fall since March, when markets were in a downward spiral. European markets also sank. Crude oil prices fell sharply as investors anticipated that demand for energy will weaken along with the economy. Treasury yields fell as investors sought shelter in safer assets.

Markets were dropping even more sharply in Europe, where investors expect the French president to announce tough measures to slow the virus’ spread and German officials agreed to impose a four-week partial lockdown. The measures may not be as stringent as the shutdown orders that swept the world early this year, but the worry is they could still hit the already weakened global economy.

Policymakers in Europe “must choose between low unemployment or low COVID transmission rates. Unfortunately, they are now left dealing with the most sensitive currency of them all, people’s lives,” Stephen Innes of Axi said in a report.

Coronavirus counts are also climbing at a troubling rate in much of the United States, and the number of deaths and hospitalizations due to COVID-19 are on the rise. Even if the most restrictive lockdowns don’t return, investors worry that the worsening pandemic could scare away customers of businesses regardless and sap away their profits.

Stocks of companies that most need the virus to abate for their businesses to get back to normal were slumping to some of the sharpest losses. Cruise operators Carnival and Norwegian Cruise Line Holdings fell at least 7%, while Royal Caribbean fell 4.8%. Delta Air Lines lost 4.1%. Live Nation Entertainment, which depends on customers going to concerts and other events, slid 3.6%.

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