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Wall Street tumbles as virus cases soar, stimulus hopes fade

Credit: REUTERS/Andrew Kelly

U.S. stocks decline picked pace on Monday afternoon, setting the Dow for its worst day in more than seven weeks, as soaring coronavirus cases and a political deadlock over the fiscal relief bill raised doubts about the fate of the economy recovery.

By Medha Singh and Shivani Kumaresan

Oct 26 (Reuters) - U.S. stocks decline picked pace on Monday afternoon, setting the Dow for its worst day in more than seven weeks, as soaring coronavirus cases and a political deadlock over the fiscal relief bill raised doubts about the fate of the economy recovery.

New infections have touched record levels in the United States, with El Paso in Texas asking citizens to stay at home for the next two weeks. In Europe, Italy and Spain imposed new restrictions.

Travel-related stocks, vulnerable to COVID-19 related curbs, dropped. The S&P 1500 airlines index .SPCOMAIR fell 5% and cruise line operators Carnival Corp CCL.N and Royal Caribbean Cruises Ltd RCL.N shed more than 9.5% each.

"People are nervous about the expansion in cases," said Christopher C. Grisanti, chief equity strategist, MAI Capital Management, Cleveland, Ohio.

"The administration has said it does not want to slow down the economy yet as cases rise they may not have a choice."

Energy .SPNY index tracked a more than 3% fall in oil prices. Other economically-sensitive industrials .SPLRCI and financials .SPSY sectors posted the steepest percentage declines among S&P sectors. (O/R)

Meanwhile, chances of a fiscal stimulus before the presidential election faded as U.S. Treasury Secretary Steve Mnuchin said there were a number of areas in House Speaker Nancy Pelosi's plan that President Donald Trump cannot accept.

Wall Street's fear gauge .VIX hit a near seven-week high even as 60 million Americans voted in a record breaking early turnout as Trump and his Democratic challenger Joe Biden enter 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 .SPLRCT, which includes Apple, is among the only three sectors apart from healthcare .SPXHC and consumer staples .SPLRCS that is expected to post an increase in profit compared to a year earlier.

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

At 12:30 p.m. ET, the Dow Jones Industrial Average .DJI fell 767.14 points or 2.68% to 27,577.43, the S&P 500 .SPX lost 73.59 points or 2.11% to 3,392.13 and the Nasdaq Composite .IXIC lost 201.99 points, or 1.75% to 11,347.51.

Software company Oracle Corp ORCL.N fell about 4% 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 10% as quarterly adjusted revenue fell due to coronavirus-led delays in the 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 rose between 2.2% and 0.3%.

Declining issues outnumbered advancers for a 7.91-to-1 ratio on the NYSE and for a 5.00-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and two new lows, while the Nasdaq recorded 24 new highs and 38 new lows.

(Reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Arun Koyyur)

((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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