US stock markets continued their decline on Monday as investors worried that Congress would not approve more stimulus liquidity ahead of the election and reaction to the surge in coronavirus cases.
The Dow closed 510 points, or 1.9%, after a late rally. The S&P 500 lost 1.2% and the heavy Nasdaq composite closed just 0.1% after a rally in tech stocks late in the day.
US stock markets enter a fourth week of selling, ending a rally that pushed them to record highs over the summer. Monday was the first time since February that the S&P 500 recorded four straight daily losses.
“Today’s market action reflects investor frustration at the inability of Congress to pass additional incentives,” Jack Ablin, CFO at Cresset Capital wrote in a note to investors. Fed Chairman Jay Powell stressed, in a speech last week, that more financial support would likely be needed “to help struggling small businesses and the nearly 11 million unemployed Americans.”
After months of debate, Congress has yet to reach an agreement on more funds for companies and individuals hit by the pandemic recession. Washington is now fighting a bitter battle to find a successor to the Supreme Court, Ruth Bader Ginsburg.
The US sell-off was followed by a sharp drop in stock prices in London. The FTSE 100 lost 3.3%, its worst day in three months, after the UK’s Covid-19 alert level was raised to four, meaning the virus is “high or rising exponentially”. This move is likely to lead to a new round of restrictions in the UK.