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Wall Street closes down on soaring virus cases, U.S. stimulus worries

Credit: REUTERS/Andrew Kelly

U.S. stocks tumbled on Monday in thin trade, with the S&P 500 posting its biggest daily decline in four weeks, as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the U.S. economic recovery.

By Herbert Lash

NEW YORK, Oct 26 (Reuters) - U.S. stocks tumbled on Monday in thin trade, with the S&P 500 posting its biggest daily decline in four weeks, as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the U.S. economic recovery.

The United States, Russia and France set daily records for coronavirus infections. The number of hospitalized Americans with COVID-19 jumped to a two-month high.

Travel-related stocks, vulnerable to COVID-19 related curbs, fell sharply. The S&P 1500 airlines index .SPCOMAIR fell about 6% and cruise line operators Carnival Corp CCL.N and Royal Caribbean Cruises Ltd RCL.Nfell more than that.

"Fears about COVID-19 resurgence and the continued failure to reach a fiscal policy package between Republicans and Democrats has investors unnerved," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

"Those are the two biggest drivers of today's decline."

The energy .SPNY index tracked a more than 3% fall in oil prices.The economically sensitive industrials .SPLRCI and financials .SPSYalso posted steep declines among S&P sectors. O/R

The big price moves came as trading volume was substantially less than the daily October average.

"From our clients' perspective, the uncertainty is causing them to stay on the sidelines. So you're seeing a lack of buyers, generally speaking," said King Lip, chief strategist at Baker Avenue Asset Management in San Francisco.

U.S. House of Representatives Speaker Nancy Pelosi spoke with Treasury Secretary Steven Mnuchin about COVID-19 relief legislation.

Wall Street's fear gauge .VIX hit its highest in more than seven weeks as uncertainty grew over the Nov. 3 election. Some 60 million Americans have voted in a record-breaking early turnout as Trump and Democratic challenger Joe Biden entered their final week of campaigning.

It is also one of the busiest weeks of the third-quarter earnings season that will see results from mega-cap U.S. tech firms including Apple Inc AAPL.O, Amazon.com Inc AMZN.O, Google-parent Alphabet Inc GOOGL.O and Facebook Inc FB.O.

The tech sector .SPLRCTis among the only three sectors apart from healthcare .SPXHC and consumer staples .SPLRCS expected to post an increase in profit from a year earlier.

Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5% have beaten Wall Street expectations, according to Refinitiv data.

Unofficially, the Dow Jones Industrial Average .DJI fell 647.1 points, or 2.28%, to 27,688.47, the S&P 500 .SPX lost 64.15 points, or 1.85%, to 3,401.24 and the Nasdaq Composite .IXIC dropped 189.35 points, or 1.64%, to 11,358.94.

Software company Oracle Corp ORCL.N fell after German rival SAP SAPG.DE abandoned medium-term profitability targets and warned of a longer-than-expected recovery time from the pandemic hit.

Hasbro Inc HAS.O tumbled as quarterly adjusted revenue fell due to coronavirus-led delays in production of movies and TV shows.

Companies deemed stay-at-home winners including Amazon.com Inc AMZN.O, Zoom Video Communications Inc ZM.O and video game companies Activision Blizzard Inc ATVI.O and Take-Two Interactive Software Inc TTWO.O bucked the downtrend and rose.

(Additional reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Arun Koyyur and David Gregorio)

((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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