Coronavirus: Trump’s Diagnosis Fuels Uncertainty for Stocks

Investors are measuring how President Donald Trump’s health could possibly impact asset prices in coming weeks. The U.S. leader remains hospitalized after being diagnosed with coronavirus or COVID-19.

Markets have so far been optimistic. Hopes of favorable results from talks on another stimulus package took the edge off a stock market selloff on Friday.

S&P 500 lost less than 1% while the so-called safe-haven assets saw limited demand. Trump was hospitalized at a military medical center outside Washington, where he remained on Saturday. This news came after trading ended on Friday.

However,it’s only less than a month before Americans go to the polls on Nov. 3.  That said, possible serious decline in Trump’s health  could roil a U.S. stock market.

The stock market has just recently notched its worst monthly performance since its selloff in March. This has caused turbulence in other assets.

If the president’s health is in jeopardy, Willie Delwiche, investment strategist at Baird, said. There’s too much uncertainty in the situation for the markets just to shrug it off, he continued.

Coronavirus: Uncertainties May be Growing

With growing uncertainty, technology and momentum stocks that have led this year’s rally may be particularly vulnerable to a selloff.  Nasdaq fell over 2% on Friday, double the S&P 500’s decline.

If people get nervous now, probably it manifests itself in crowded trades like tech and mega-cap being unwound a bit.

The market’s most crowded trade was buying technology stocks. This was according to 80% of fund managers surveyed last month by BofA Global Research.

Investors’ concentration in big tech stocks has also raised concerns about their enormous sway on moves in the broader market.

The largest five U.S. companies now account for almost 25% of the S&P 500’s market capitalization. This was according to research firm Oxford Economics. These companies are Google parent Alphabet , Amazon, Apple , Facebook , and Microsoft.