Stocks Slide As Coronavirus Angst Lingers, U.S. Stimulus Underwhelms

NEW YORK:Lingering concerns over a new variant of COVID-19 in the United Kingdom weighed on a gauge of global equities on Tuesday and sent the euro, British pound and U.S. Treasury yields lower.

The benchmark U.S. S&P 500 stock index ended lower in choppy trade, despite the U.S. Congress’ passage of an $892 billion aid package, as investors weighed the possibility of further economic disruption from the coronavirus.

“The unfortunate truth is we’ve been struck with this mutated virus from Great Britain, and now you’re left with a void as the market looks forward on a short-term basis,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Some investors said the fiscal stimulus had already been priced into U.S. equities, while other observers considered the package underwhelming.

“There were probably hopes that there would be something bigger,” said Michael Purves, chief executive of Tallbacken Capital Advisors. “There’s a good chance the economy will need another package.”

Weak U.S. economic data, including existing home sales and an index of consumer confidence, also stymied stocks while lending a boost to the dollar.

The sluggishness in U.S. stocks offset a rebound in European stocks, which had been pummeled on Monday as fresh coronavirus concerns mounted. Progress toward a trade deal between the European Union and the UK helped lift the pan-European STOXX index, which ended 1.18% higher. The STOXX logged its biggest one-day percentage gain in more than five weeks.

As a result of the performance in U.S. stocks, MSCI’s index of global stocks slipped. It fell 0.14%.

On Wall Street, the Dow Jones Industrial Average fell 200.94 points, or 0.67%, to 30,015.51, the S&P 500 lost 7.66 points, or 0.21%, at 3,687.26, and the Nasdaq Composite added 65.40 points, or 0.51%, at 12,807.92.

U.S. Treasury yields also fell as investors weighed the likelihood of increased lockdowns in response to the new COVID-19 variant. Benchmark 10-year Treasury notes last rose 6/32 in price to yield 0.9213%, versus 0.941% late on Monday.

Among currencies, the euro and the pound dropped, in part on expectations that such restrictions could weaken Europe’s economic outlook. On Monday, countries across the world shut their borders to Britain because of fears over the new variant.

The euro was last down 0.69% to $1.2163, while the pound fell 0.85% to $1.3357.

The risk-off sentiment in currency markets propped up the dollar index, which rose 0.55%. Even so, the index was still on course for a third consecutive quarterly loss.

Oil markets also reflected sustained worries over the new coronavirus variant. Brent settled 1.6% lower to $50.08 a barrel, while U.S. crude dropped nearly 2% to $47.02 a barrel.

Still, some investors maintained hope for a strong economic recovery in 2021, given expectations that vaccines would be effective against the new variant of COVID-19.

The new mutation “is a bump in the road, but that road is still leading to a much stronger recovery in the second half of next year,” said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.