The values of hotel companies and airlines are the most affected by the increase in cases in the US and the tightening of restrictions in Europe
With the sole exception of large technology companies, which continue to show iron health, the main Wall Street indices have plummeted this Wednesday due to the increase in coronavirus cases in the United States and Europe, with a runaway pandemic that frustrates hopes of a rapid global recovery. The red that announced the opening of the stock market this Wednesday has been felt as a shock wave in the European stock markets. On Tuesday, Wall Street closed without a clear direction in a market restless also by the US elections on November 3.
Futures contracts fell 1.78% on the Dow Jones, 1.53% on the expanded S&P 500 and 1.28% on the Nasdaq. The values of hotel companies, airlines and other companies directly affected by the movement restrictions imposed to curb COVID-19 are the most shaken by uncertainty. The Wynn Resorts corporation, which operates luxury hotels and casinos, saw a 2% drop, and airlines in the S&P index, 3%. Energy stocks also lost around 3% for fear of a drop in demand.
The record of infections and hospitalizations due to COVID-19 in the Midwest of the United States, as well as the fear of a new confinement in France and the tightening of measures in Germany, have curbed the appetite of investors.
In addition to the out-of-control pandemic, the inability to reach an agreement in a new round of negotiations to approve more fiscal stimulus in the US before next week’s elections has tarnished all the Dow’s gains in October and pushed the index to S&P 500 benchmarks near lows compared to the past four weeks.
Donald Trump has promised this Tuesday “the best possible program” of economic aid, but only after the elections have been held, accusing Democrat Nancy Pelosi, speaker of the House of Representatives, of not negotiating in good faith. Talks have run aground on the amount of this new aid package, which would be the second after the approval, in spring, of the largest stimulus program, for an amount of close to three trillion dollars, since New Deal of the 1930s with which the US government fought the Great Depression.
“It seems there is no will [política] to reach a new budget relaunch plan before the end of the first quarter of next year ”, considers analyst Michael Hewson, from CMC Markets, quoted by the agency France Presse.