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US STOCKS-Wall St set to drop as surge in virus cases clouds economic outlook

Credit: REUTERS/MIKE SEGAR

Wall Street was set to fall on Wednesday as coronavirus cases rose at an alarming rate in the United States and Europe, quelling hopes of a quick recovery in the global economy.

By Medha Singh and Shivani Kumaresan

Oct 28 (Reuters) - Wall Street was set to fall on Wednesday as coronavirus cases rose at an alarming rate in the United States and Europe, quelling hopes of a quick recovery in the global economy.

Wynn Resorts WYNN.O and United Airlines Holdings UAL.O, companies sensitive to coronavirus-led restrictions, dropped 2% and 3%, respectively, in premarket trading. Energy companies took a hit from a slump in oil prices, with Occidental Petroleum Corp OXY.N falling about 4%. O/R

New cases and hospitalizations set records in the U.S. Midwest, while concerns over a national lockdown in France and tighter restrictions in Germany sapped investor appetite for risk. MKTS/GLOB

"Whether you call it a continuation of the pandemic or a third wave of new case discovery - it is the largest concern," said Art Hogan, chief market strategist at National Securities in New York.

"Unless and until we get through this pandemic, it is hard for investors to imagine a better economic time."

A spiraling pandemic and an impasse in Washington over fresh fiscal stimulus sent the S&P 500 and tech-heavy Nasdaq to their lowest close in three weeks on Tuesday.

Wall Street's fear gauge .VIX spiked to its highest level in nearly two months on concerns over a delay in counting the huge volume of mail-in ballots, meaning a winner might not be declared the night of Nov. 3, when polls close.

Democratic challenger Biden leads President Donald Trump nationally by 10 percentage points, according to the Reuters/Ipsos poll, but the competition is tighter in swing states, which will decide the victor.

"The uncertainty of not knowing the direction we are heading is making investors step on the sidelines and wait for the election results," Hogan said.

At 08:27 a.m. EDT, Dow E-minis 1YMcv1 were down 1.81% at 26,872 points and S&P 500 E-minis EScv1 fell 1.51% to 3,332 points. Nasdaq 100 E-minis NQcv1 dropped 1.3% to 11436 points.

Of the 170 S&P 500 companies that have reported third-quarter results so far, about 84% have topped expectations for earnings, according to Refinitiv data. Profit on average is expected to fall 16.4% from a year earlier.

Microsoft Corp's MSFT.O quarterly results surpassed analysts targets, benefiting from a pandemic-driven shift to working from home and online learning. Its shares, however, fell 2.4% after rising 35% so far this year.

The other Big Tech companies - Apple AAPL.O, Alphabet GOOGL.O, Amazon AMZN.O and Facebook FB.O - which are due to report results on Thursday, fell between 0.9% and 1.9%.

General Electric Co GE.N jumped 7% after the company unexpectedly reported a quarterly profit and a positive cash flow on the back of cost cuts and improvements in its power and renewable energy businesses.

Boeing BA.N slipped 0.2% as it reported its fourth straight quarterly loss, while reaffirming its expectation that U.S. deliveries of the 737 MAX aircraft would resume before year-end.

(Reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Arun Koyyur and Anil D'Silva)

((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780, outside U.S. +91 80 6182 2802; Twitter: https://twitter.com/medhasinghs;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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