Dow plummets 500 points as spiking virus cases prompt more lockdowns

Getty Images / Xinhua News Agency
  • US stocks tumbled on Wednesday as surging COVID-19 cases prompted a new wave of lockdowns overseas.
  • A 40% surge in COVID-19 related deaths in Europe over the past week spurred Germany and France to prepare new restrictions on movement within the country.
  • New restrictions in Europe could amount to a shutdown of bars and restaurants while schools and nurseries remain open.
  • Watch major indexes update live here.

US stocks continued their decline on Wednesday as better than expected earnings were no match for a continued surge in COVID-19 cases.

A new wave of potential lockdowns overseas are being considered following a 40% surge in COVID-19 related deaths in Europe over the past week.

Germany and France are preparing to announce new restrictions on the movement of people, though the potential shutdowns might not be as strict as they were earlier in the year.

A shutdown of bars and restaurants are likely, while schools, nurseries, and other businesses could remain open. Investor concerns of the US experiencing a new wave of lockdown restrictions is likely rising after the country experienced record COVID-19 cases over the weekend.

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Wednesday:

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The Cboe Volatility Index — or VIX — climbed as high as 38.13, its loftiest peak in more than four months. For context, the VIX has traded at an average of 26.30 since the start of August after registering multiyear highs in March.

While record-high coronavirus case counts fuel concerns about the pace of economic recovery, prospects for timely fiscal support are all but exhausted. The Senate adjourned on Monday and isn’t set to reconvene until Nov. 9, putting to bed any remaining hope for a stimulus bill. With the pace of recovery slowing, some fear new aid will arrive too late to keep the economy from tumbling again.

The upcoming US presidential election has also contributed to the upswing in volatility. While elections typically escalate price swings, the chance of delayed results this year has investors bracing for extended market choppiness.

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In corporate news, First Solar’s third quarter earnings report bested analyst expectations. Deutsche Bank posted a better than expected third quarter profit after its debt-trading unit posted a 47% surge in business.

Billionaire investor Stanley Druckenmiller said that a potential blue wave election outcome could hurt stocks in the long term.

Gold lost ground on Wednesday, falling as much as 1.6%, to $US1,876.67 per ounce.

Oil prices tumbled. West Texas Intermediate crude fell as much as 5.8%, to $US37.28 per barrel. Brent crude, oil’s international benchmark, fell 4.9%, to $US39.17 per barrel, at intraday lows.

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