COVID-19 fears, stalled stimulus see Dow shed 500 points

Bank shares hammered on heels of report alleging several of them continue to profit from illicit activities.

Wall Street banker
US stocks dropped on Monday on fears that a fresh round of coronavirus lockdowns could be in the cards and Congress's continuing failure to pass a new round of virus relief aid [File: Bloomberg]

Major stock indexes in the United States ended in the red on Monday as soaring coronavirus cases in Europe sparked fears of another round of lockdowns, while an increasingly acrimonious political environment in the US fed concerns that negotiations in Congress for a new round of virus relief aid will continue to stall.

The Dow Jones Industrial Average finished the session down 509.72 points to close at 27,147.70.  The S&P 500 – a gauge for the health of US retirement and college savings reports – closed down 1.16 percent  at 3281.06 while the tech-heavy Nasdaq Composite Index gave up 0.13 percent to finish at 10,778.80.

Shares of electric truck start-up Nikola closed down 19.3 percent after its founder Trevor Milton stepped down as executive chairman amid allegations of nepotism and fraud.

General Motors Co, which took an 11 percent stake in Nikola for about $2bn earlier this month, closed down 4.76 percent.

Bank stocks took a beating on Monday with Dow financials finishing 3 percent in the red after an investigation by BuzzFeed and the International Consortium of Investigative Journalists based on a cache of leaked documents revealed that several major banks had transferred more than $2 trillion in suspect funds between 1999 and 2017.

Bucking the downward trend – shares of Oracle closed up 1.79 percent despite the US tech giant and China’s ByteDance issuing conflicting statements over the terms of a deal they reached that would allow popular video-sharing app TikTok to keep operating in the US.

Fears are mounting that a new wave of coronavirus lockdowns and restrictions could be in the cards as Europe and the US head into the flu-heavy fall and winter seasons.

Consumer confidence
A worker dresses a mannequin as she waits for customers in a store in Miami, Florida, US [File: Marco Bello/Reuters]

The gloom slammed into shares of US travel related companies on Monday including airlines, hotel and cruise operators.

Investors are taking heed as US consumer sentiment and economic activity show signs of plateauing, while layoffs remain widespread. Some 30 million Americans were collecting unemployment benefits from either state or federal programmes at the end of August.

Mounting economic worries are also being fuelled by Congress’s continuing failure to agree on a new round of virus relief aid to help struggling Americans.

The passing of Supreme Court Justice Ruth Bader Ginsberg, which has left an empty slot on the court to be filled, has intensified tensions in US politics in an already especially contentious presidential election.

Source: Al Jazeera