Major U.S. stock indexes closed lower on Wednesday, sliding in the final hour of trade, as market participants struggled to shake off worries about a lack of a coronavirus aid package and rising COVID-19 cases.
How did major benchmarks fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.44% tumbled 525.05 points, or 1.9%, to close at 26,763.13, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.63% lost 78.65 points, or 2.4%, ending at 3,236.92. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -1.65% shed 330.65 points, or 3%, finishing at 10,632.99, after plunging as low as 3%.
That left the Dow 9.4% off its record close in February, the S&P 9.6% lower than its September all-time high and the Nasdaq 11.8% down from its September record, according to Dow Jones Market Data.
On Tuesday, the Dow rose 140.48 points, or 0.5%, to end at 27,288.18, while the S&P 500 finished 34.51 points higher, up 1.1%, at 3,315.57. The Nasdaq gained 184.84 points, or 1.71%, to close at 10,963.64.
What drove the market?
The losses took the S&P 500 within a whisker of a correction, defined as a 10% pullback from a recent peak.
“In big tech, a lot of the growth and momentum in stocks that exploded through the end of August, a lot of that’s retracing,” said Sahak Maneulian, head of equity trading at Wedbush Securities, in an interview. But volatility /zigman2/quotes/210598281/delayed VIX -2.78% also has made a comeback, he said, following a long period of dormancy. “We’re in the technical downdraft and it’s very hard to get out of as we get closer to the election and year-end.”
Equities briefly caught a footing in Tuesday’s session, but were pressured again Wednesday amid deep-seated divides in Washington over additional pandemic aid and a resurgence of coronavirus cases in Europe and parts of the U.S., including in Texas, Wisconsin, Oklahoma and Colorado.
“There’s been a worry about what happens going into the fall and winter. That’s on investors’ minds,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, of rising COVID-19 cases and political unease ahead of the Nov. 3 general election.
“But I also think investors are reluctant to keep their feet completely out of the market,” he told MarketWatch, pointing to expectations for a safe and effective vaccine to be available at some point next year.
Johnson & Johnson /zigman2/quotes/201724570/composite JNJ -2.55% on Wednesday announced the start of a 60,000-person clinical trial of its single-dose COVID-19 vaccine on three continents, making the drugmaker the fourth experimental vaccine candidate to enter final-stage testing in the U.S.
Skeptics said Tuesday’s brief turnaround for stocks was unconvincing, particularly given the still elevated stock values against a backdrop of tremendous uncertainty.
“It’s not a surprise it’s becoming a little more volatile heading into the election,” Esty Dwek, head of global macro strategy at Natixis Investment Management, told MarketWatch. “But right now it’s kind of more about Congress.”
“After Justice Bader Ginsburg’s passing, the probability of another fiscal package before the election has become quite small.”