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Stock Market News for Oct 27, 2020

Zacks.com logo Zacks.com 10/27/2020

Wall Street closed sharply lower on Monday as new COVID-19 infections spiked to a record in the United States. Moreover, a fresh coronavirus-aid package looks remote possibility before the upcoming U.S. presidential election. Reopening stocks have suffered the most. All the three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) plunged 2.3% or 650.19 points to close at 27,685.38. Notably, 29 components of the 30-stock index ended in the red while 1 finished in green. This was the worst single-day performance of the Dow since Sep 3 and it closed below 28,000 for the first time since Oct 6. The blue-chip index also closed below its 50-day moving average for the first time since Sep. 29. The index is 3% away to become green year to date.

Meanwhile, the tech-laden Nasdaq Composite finished at 11,358.94, tumbling 1.6% or 189.34 points due to weak performance by large-cap stocks. The tech-heavy index recorded its worst single-day performance since Oct 19.

Moreover, the S&P 500 plummeted 1.9% to end at 3,400.97. This was the benchmark's worst day since Sep 23. The broad-market index also closed below its 50-day moving average for the first time since Oct 6. The Energy Select Sector SPDR (XLE), the Industrials Select Sector SPDR (XLI) and the Materials Select Sector SPDR (XLB) tanked 3.6%, 2.5% and 2.5%, respectively. Notably, all eleven sectors of the benchmark index closed in negative zone.

The fear-gauge CBOE Volatility Index (VIX) was up 17.8% to 32.46. A total of 8.72 billion shares were traded on Monay, lower than the last 20-session average of 8.9 billion. Decliners outnumbered advancers on the NYSE by a 6.23-to-1 ratio. On Nasdaq, a 4.52-to-1 ratio favored declining issues.

Record Spike in COVID-19 Infections

According to the Johns Hopkins University, the United States witnessed all-time high single-day spike of 83,757 new coronavirus cases on Oct 23, surpassing the previous high of 77,632 in Jul 16. New cases remained above 83,000 on Oct 24 too. Johns Hopkins University showed daily coronavirus cases in the United States have risen a record high by an average of 68,767 over the past seven days.

Per CNBC, more than 20 states reported record-high numbers of average daily new cases. Moreover, new cases are rising by 5% or more in 40 states. In Europe, the government of France has declared a public health state of emergency and the U.K. government is mulling a second national lockdown. Russia also saw a spike in new COVID-19 cases.

Stimulus Impasse Continues

Despite intense negotiations between the White House and the Democrats, the U.S. Congress is unable to reach a deal regarding the size and the scope of a fresh round of fiscal stimulus. The Democrats have settled for $2.2 trillion stimulus while the White House approved only $1.8 trillion.

Per CNBC, House Speaker Nancy Pelosi criticized the White House over coronavirus relief talks as new infections in the United States hit record highs. Pelosi said that Democrats “have stressed the importance of testing, but the Administration has never followed through. The Republicans’ continued surrender to the virus – particularly amid the recent wave of cases – is official malfeasance.”

Reopening Stocks Suffer

The reopening stocks, especially the travel stocks, have suffered the most as a result of a fresh spike in coronavirus cases globally. Shares of Royal Caribbean Group RCL, Norwegian Cruise Line Holdings Ltd. NCLH, Delta Air Lines Inc. DAL, United Airlines Holdings Inc. UAL and American Airlines Group Inc. AAL plunged 9.7%, 8.5%, 6.1%, 7% and 6.4%, respectively. United Airlines Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

New home sales in September declined to 959,000 units compared with a downwardly revised 994,000 units in August. The Consensus estimate was 1,020,000 units. New Home Sales jumped 32% year over year.  

Stocks That Have Made Headline

Cenovus & Husky Deal to Create C$1.2B Annual Synergies

The North American energy space has witnessed another major merger and acquisition (M&A) deal with Cenovus Energy Inc. CVE and Husky Energy Inc.’s recent creation of a new integrated combination to achieve more stability amid the current uncertain times. (Read More)

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