Stocks fall as coronavirus cases keep rising

Stocks slumped sharply on Wall Street Monday, as a troubling climb in coronavirus case counts in the U.S. and Europe threatens the global economy.

In afternoon trading on Monday, the Dow fell more than 900 points, or 3.2%, to 27,400. The S&P 500-stock index was 2.8% lower— and on track for its worst day in more than a month — while the tech-heavy Nasdaq composite was down 2.7%.

Stocks also fell across much of Europe and Asia. In another sign of caution, Treasury yields were dropping again, and prices of the bonds rising, showing that investors are looking for safety as the markets continue to be rocky.

Coronavirus counts are spiking in much of the U.S. and Europe, raising concerns about more damage to the still-weakened world economy. The U.S. came very close to setting back-to-back record daily infection rates on Friday and Saturday.

"Both the single-day number of U.S. cases and the seven-day moving average hit new records over the weekend, and the third wave of Covid cases continues to broaden," Ian Shepherdson of Pantheon Macroeconomics told investors in a research note.

In Europe, Spain's government declared a national state of emergency on Sunday that includes an overnight curfew, while Italy ordered restaurants and bars to close each day by 6 p.m. and shut down gyms, pools and movie theaters.

Hopes are fading, meanwhile, that lawmakers in Washington, D.C., will be able to deliver more support for the economy anytime soon. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke several times last week on a potential deal to send cash to most Americans, restart supplemental benefits for laid-off workers and provide aid to schools, among other things.

Read: That's the status of a second $1,200 stimulus check?

But deep partisan difference remains on Capitol Hill, and time is running out for anything to happen before the presidential election on November 3. Any compromise reached between House Democrats and the White House would also likely face stiff resistance from Republicans in control of the Senate.

"The double whammy of a stalled stimulus bill and new highs in cases is a harsh reminder of the many worries that are still out there," Ryan Detrick, Chief Market Strategist for brokerage LPL Financial, said by email. "Most of the recent economic data has been strong, but when you see parts of Europe going to back to rolling shutdowns, it reminds us this fight is still far from over."

Worries about the diminishing prospect for more stimulus in the short term helped drive the S&P 500 to a 0.5% drop last week, its first weekly loss in the last four weeks.

"While we are seeing nations attempt to stifle the spread of the virus through more localised and tentative restrictions, it seems highly likely that we will eventually see a swathe of nationwide lockdowns if the trajectory cannot be reversed," said Joshua Mahony, senior market analyst at derivative trader IG Group in London.

"Traders remain torn as they weigh up the potential impending benefits of a U.S. stimulus package and potential vaccine," he added.

The U.S. economy has recovered a bit since the stay-at-home restrictions that swept the country early this year eased, and economists expect a report on Thursday to show it grew at an annual rate of 30.2% during the summer quarter after shrinking 31.4% during the second quarter.

But momentum has slowed recently after a prior round of supplemental unemployment benefits and other stimulus that Congress approved earlier this year expired.

Stocks of companies that need the virus to abate and the economy to return to normal were logging some of the sharpest losses in morning trading.

Norwegian Cruise Line fell 9.3%, Marathon Oil dropped 6.1% and United Airlines lost 6.2%.

Energy stocks saw the largest share-price losses among the 11 sectors that make up the S&P 500, falling in concert with oil prices. Nearly 99% of the stocks in the index were lower.

Among the market's few gainers on Monday were companies that can succeed even in a stay-at-home economy. Zoom Video Communications gained 3.1%. Shares of online retail giant Amazon Inc. was up slightly.

This upcoming week is the busiest of this quarter's earnings season, with more than a third of the companies in the S&P 500 index scheduled to report. Besides Amazon and Apple, Ford Motor, General Electric and Google's parent company, Alphabet, are also on the docket.

Across the S&P 500, profit reports for the summer have been mostly better than Wall Street had feared, though they're still on pace to be more than 16% lower than year-ago levels.