U.S. stock markets fell sharply at the opening on Wednesday, as the increasingly rapid spread of the Covid-19 virus across most of the northern hemisphere made the prospect of renewed lockdowns and all of the attendant negative effects on the economy more likely.
European stock markets had, for once, led the trend, with the German DAX falling over 4% on reports that Chancellor Angela Merkel had proposed shutting bars and restaurants for the month of November to break the trend of rising infections, hospital admissions and deaths. France is also reported to be planning to order a week-long national lockdown later Wednesday.
However, the U.S. figures too remain on a clearly negative path with hospital admissions and deaths both on an upward path for a month and now around the highest levels since August. Nor is the rising rate of new infections due principally to increased testing. The positivity rate – the proportion of tests that come back positive – has also risen to its highest since August, at 8.2% from less than 4% in late September.
“Overall, national hospitalizations remain on track to breach the first and second wave peaks by Thanksgiving,” said Ian Shepherdson, chief economist with Pantheon Macroeconomics, in a note to clients.
The Dow Jones Industrial Average was down 521 points, or 1.9%, at 26,942 points. The S&P 500 was down 1.8% and the Nasdaq Composite, despite being buoyed by a greater concentration of relative winners from the pandemic, was down 1.9%.
Losses were particularly heavy in Google owner Alphabet, which fell over 4% on the back of a report that Apple is looking at developing its own search engine, afraid of the antitrust scrutiny its current deal with Google has attracted. The Department of Justice last week accused Google of abusing its dominant market position in search, specifically mentioning an agreement with Apple that makes Google’ the default search engine on its iPhones.
The slump came on one of the busiest days of the current earnings season, which saw Boeing, General Electric and UPS all beat expectations for their bottom lines. GE stock rose 7.3% to test a four-month high, while Boeing outperformed slightly, falling only 1.2% after narrowing its quarterly loss sharply and announcing thousands more job cuts.
Stay-at-home stocks were among the few relative winners in the general rout, with Netflix stock rising 0.6% and Peloton Interactive stock rising 0.2%.