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Oct. 31, 2020, 8:04 a.m. EDT

Dow sees worst week and worst month since March as COVID impact weighs, election looms

By Andrea Riquier, and William Watts

Stocks extended losses Friday, with investors waving off strong quarterly results from technology heavyweights to focus on the uncertain outlook amid a surge in COVID-19 cases in the U.S. and Europe.

On the last trading day of the month, investors also faced the prospect of the U.S. elections next Tuesday and no certainty about the timing of any further fiscal aid for businesses and consumers from Congress.

The Dow Jones Industrial Average (DOW:DJIA) closed down 157.51 points, 0.6%, at 26,501.60, while the S&P 500 (S&P:SPX) lost 40.15 points, or 1.1%, to close at 3,269.96. The Nasdaq Composite (AMERICAN:COMP) slumped 274 points, or 2.5%, to finish at 10,911.59.

All three indexes closed well off much steeper midday lows, but the week still marked the biggest weekly and monthly decline for the Dow since March, and the worst week for the S&P 500 and the Nasdaq since March.

The Dow on Thursday rose 139.16 points, or 0.5%, to close at 26,659.11, while the S&P 500 added 39.08 points, or 1.2%, to finish at 3,310.11. The Nasdaq Composite gained 180.72 points, or 1.6%, finishing at 11,185.59.

Despite that, the Dow closed 6.5% lower for the week and 4.6% lower for the month. The S&P 500 lost 5.6% during the week, and the Nasdaq was down 5.5%.

Markets are focused on “the virus, the election, and stimulus,” said Tom Mantione, managing director, UBS Private Wealth Management, and none offer any hope. “We just saw Germany and France re-enter lockdowns. That’s not helping. What’s going to happen in the U.S., will we follow suit? Oh and by the way, we have no stimulus. There’s no rescue now.”

Stocks have been dogged by worries over the economic outlook as European countries put in place tougher restrictions on activity in response to a surge in COVID-19 cases, while the U.S. saw the number of new daily infections hit records. The U.S. on Thursday saw more than 90,000 new cases on Thursday, a new daily high, according to a New York Times tracker.

See : U.S. counts more than 90,000 cases in a single day and The Lancet says Trump pandemic response is ‘disastrous’

Nervousness over Tuesday’s U.S. elections also continues to hang over the market, analysts said. Democratic challenger Joe Biden has seen his lead over President Donald Trump narrow in national polls, underlining investor fears of an unclear or contested outcome that could drag on for weeks.

See : The stock market’s ‘presidential predictor’ is on cusp of forecasting a Biden victory

If volatility continues, UBS’ Mantione told MarketWatch, he would be an “incremental” buyer of stocks in sectors that look likely to benefit from either administration, such as industrials (PSE:XLI) .

He is also keeping a careful eye on fiscal stimulus talks after the election, and hoping something can be agreed to before late January. “Can the economy wait that long? The economy in aggregate can. But there are individual people and pockets of the economy that cannot wait,” Mantione said.

The so-called FAANG stocks, which have been key drivers of the stock market’s rally off the lows seen in March, were in focus after Facebook Inc., Apple Inc., Amazon.com Inc. and Google parent Alphabet Inc. all delivered upbeat results, including record-breaking sales, following Thursday’s closing bell. Netflix Inc. also got in on the act, announcing an increase in prices for U.S. customers.

Opinion: Apple, Amazon, Facebook and Google all produce record sales amid Big Tech backlash

While earnings and revenues for the tech juggernauts largely crushed expectations, guidance for the future was far more cautious, reflecting concerns about the long-term effect of COVID-19 on demand, analysts noted.

“The big tech names have been driving all the stock market gains since the summer on the idea their performance was impervious too — or even helped by — the pandemic,” said Jasper Lawler, head of research at London Capital Group, in emailed comments. “The earnings beat expectations but by carrying the weight of the market, tech stocks were priced to perfection .

On the U.S. data front, personal income rose 0.9% in September, while consumer spending increased 1.4% . Economists polled by MarketWatch had expected income to show a 0.5% rise, while spending was seen increasing 1.1%. Core inflation matched expectations with a 0.2% rise.

The final October reading of the University of Michigan’s consumer sentiment index edged up to 81.8 in October from an initial 81.2. The rise largely reflected growing optimism among Democrats thatBiden would win the presidential election.

The yield on the 10-year Treasury note (XTUP:BX:TMUBMUSD10Y) was up near 4 basis points at 0.865%. Yields and bond prices move in opposite directions.

The pan-European Stoxx 600 Europe (STOXX:XX:SXXP) closed 0.2% higher, while London’s FTSE 100 stock index (FTSE:UK:UKX) slipped 0.1%.

Oil futures remained under pressure, with the U.S. benchmark (NYM:CL.1) closing at a 5-month low , down 1.1% to $35.79 a barrel on the New York Mercantile Exchange. Gold found support, with the December contract (NYM:GC00) up 0.6% to settle at $1,879.90 an ounce.

The ICE U.S. Dollar Index (IFUS:DXY) , a measure of the currency against a basket of six major rivals, was up 0.1%.

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