Stocks Continue to Decline. What’s Happening on the Market?

Stocks plummeted down on Monday as new reports showed a jump in coronavirus cases in the U.S. and Europe. Major countries tightened restrictions, increasing the spectre of a further pullback in business operations.

Furthermore, losses accelerated throughout the session as the pandemic continues to damage the economy. After the last session, the Dow Jones closed lower by 2.3% or 650 points. Thus, marking the index’s worst day since early September. Nasdaq composite and the S&P 500 each sold off sharply during the session as well.

Shares of companies set to benefit from a broader economic reopening tumbled down. Among them were cruise lines including Norwegian Cruise Line Holdings (NCLH), airlines like American Airlines (AAL), and hotels like Wynn Resorts (WYNN). On the other hand, shares of AstraZeneca (AZN) outperformed. The Financial Times announced that the company’s coronavirus vaccine candidate developed with the University of Oxford produced a robust immune response in older persons, boosting the stock.

Meanwhile, the United States posted back-to-back days of record-high new infection cases during the weekend. New Covid-19 cases toped 80,000 for each of Friday and Saturday. States in the Midwest and West have been hardest hit by the latest surge in cases. 

The pandemic is surging in Europe

On Sunday, France reported more than 52,000 positive cases over a 24-hour period, enduring its own record-high day for new Covid-19 cases. As a result, two-thirds of the country became subject to a 9 p.m. curfew starting Friday night. Italy also hit a record-high for new cases last week, and the authorities announced that new business restrictions came into effect on Sunday. Meanwhile, Spain declared a state of the emergency over the past weekend, including a country-wide curfew.

UBS economist Paul Donovan stated that markets ultimately care about the economic impact of pandemic news. He added that Spain and Italy had followed France in adopting the ‘Buffy the Vampire Slayer’ approach, proclaiming that it is not safe to be outdoors after dark. While this is bad news for restaurants and bars, it’s more positive for home entertainment and supermarkets.

On Tuesday shares of Lockheed Martin (LMT), Raytheon Technologies (RTX), and Boeing (B.A.) came under pressure during the early trading. China made a statement about imposing sanctions on the defense units of both companies, following the U.S. approval of a $1.8 billion arms sale to Taiwan last week. It caused some pressure. China considers Taiwan to be part of its territory, but the country has not yet specified the sanctions that will be put into place.