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Stocks crumble as coronavirus cases continue to spread globally

Trump, Pelosi, McConnell at odds on stimulus
Trump, Pelosi, McConnell at odds on stimulus 10:44

Stocks tumbled again on Wednesday as virus cases spread and European countries move toward imposing more restrictions. The U.S. financial markets ended the day with lows across the board. The Dow had its biggest drop since June, shedding 942 points, or 3.4%, to 26,521, while the S&P 500 and tech-heavy Nasdaq closed with lows greater than 3%. 

Losses were even bigger in markets in Europe, where many are bracing for more lockdowns as hospitals began to fill with coronavirus patients.  

"Today, markets will focus 100% of coronavirus inflection, which cuts only one way — to sell," said Jamie Cox, Managing Partner for Harris Financial Group about today's market sell-off, in an email to CBS MoneyWatch.

Caution continues to hang over markets. Restrictions on businesses and other activities to help curb surging infections could choke off economic improvements seen since the summer. Fresh pandemic precautions are also drawing a public backlash despite spiking levels of illness in European countries.

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.

How to navigate market turbulence 06:56

Uncertainty surrounding U.S. election, stimulus

Few sectors, such as communication and IT services, are gaining amid the outbreaks, deepening the pessimism in Asia. The uncertainty surrounding the upcoming U.S. election also has left market players wary.

Investors are clamoring for Congress to deliver more virus relief for the U.S. economy, but they're increasingly acknowledging it won't happen anytime soon. Hopes that lawmakers in Washington could reach agreement on a fresh round of COVID-19 relief before the presidential election disappeared earlier this week. Senators adjourned on Monday and are not scheduled to return until November 9, impeding progress on a new stimulus bill.

Wall Street's caution is also apparent in how it's reacting to corporate profit reports. Through the first two weeks of earnings season, companies that reported better than expected results have not been getting the typical pop in their stock price following the news.

In energy trading, crude oil prices fell sharply on expectations that demand would weaken even more than it already has, and Treasury yields dropped as investors sought shelter in lower-risk investments. The selling was widespread, pushing 97% of the stocks in the S&P 500 lower. Brent crude, the international standard, fell more than a dollar to just over $40 a barrel.

"The country is under significant stress and the markets continue to reflect that reality," Harris' Cox said.

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