Instant View: U.S. stocks tumble again as election looms, virus spread balloons

(Reuters) – Wall Street’s main indexes slumped more than 3% on Wednesday as a surge in coronavirus cases dashed hopes of a quick global economic recovery and traders got nervous before next week’s U.S. presidential election.

FILE PHOTO: A sign for Wall Street is seen with a giant American flag in the background across from the New York Stock Exchange November 5, 2012. REUTERS/Chip East

STORY: [.N] [US/]

MARKET REACTION:

* STOCKS: Dow down 3.16%, S&P 500 down 3.10%, Nasdaq down 3.20%

* BONDS: Benchmark 10-year notes US10YT=RR last rose 4/32 in price to yield 0.766%, from 0.778% late on Tuesday. [US/]

* FOREX: The dollar index =USD rose 0.345%, with the euro EUR= down 0.55% to $1.173. [FRX/]

* VIX: The VIX .VIX was up 18.5% at 39.52, reaching its highest since mid June

COMMENTS:

ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT CORP., CHICAGO

“The market’s resilience has been incredible this year. The fact that every time it keeps holding and pushing to new highs and holding those highs, given what the news has been.”

“That’s been built on a three-legged stool. One leg is the Federal Reserve, and everything they are doing on the monetary side. And I think that that’s legitimate and people can continue to count on that.”

“But I do think the other two legs are wobbly and I think people are beginning to realize that they are wobbly. And that obviously relates to fiscal stimulus… There was stimulus in the past, there will be stimulus in the future, but it’s just not coming today. And so the expectation that it’s coming quickly has been ill-founded.”

“And then obviously the virus is out of control. It’s spiking, it’s bad. The concept that … it’s going to disappear is just a faulty assumption.”

“You put those last two together and yeah the third quarter earnings are really good, but I just think the optimism for the fourth quarter is way overstated, and as people start to come to terms with that, people are going to say maybe the fourth quarter is not going to be what we think it’s going to be.”

“What seems to be the increasing likelihood of a ‘Blue Wave’ (in the Nov. 3 election) is something that is going to weigh a little bit on the market as well. As the polls keep shifting that way, I think that that is also something that is in the short run, a headwind.”

JOHN PAYNE, SENIOR FUTURES/OPTIONS BROKER, DANIELS TRADING, CHICAGO

“When things get scary everybody rushes to the dollar. The currency markets right now are dealing with problems in Europe, and Europe – I don’t know if the market thinks they have a lot of bullets left to fire at this thing. From a quantitative easing standpoint, that’s what is going to come. You see the dollar being more attractive because maybe Trump won’t go in that direction.

“Why do you sell stocks? You sell stocks to raise cash, and if anything, the need for cash is now uncertain. Asset prices are elevated. Without another COVID hit to slowdown, what do you need to sell stocks for? There’s really no reason to raise cash. Again, it comes down to who needs money and where do you need money? With no stimulus, rents are due and you got to pay bills. With no money coming in, what do you sell to pay bills?”

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:

“It’s all about the coronavirus, and also there might be some election jitters because there’s a feeling out there that there might be some sort of contested election. But the main factor is the coronavirus and its impact on economic growth. With the possibility of some of the European countries locking down again, that’s a factor.”

MATTHEW KEATOR, MANAGING PARTNER, THE KEATOR GROUP, LENOX, MASSACHUSETTS

“Investors have pretty much figured we’re not going to see any stimulus before the election and they’re anticipating some additional shutdowns due to spikes in coronavirus cases. Investors are concerned we could see repeat of what we saw in the spring, maybe not at the same magnitude.”

“Elections are also part of the investor’s psyche, the uncertainty as to how long it will take to certify election. Investors don’t do well with uncertainty and that’s a cloud hanging over the markets.”

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