Markets Plummet As September Stock ETF Woes Continue | ETF Trends

In what is shaping up to be a rough September so far, stock indexes and ETFs plummeted on Monday, amid panic that the coronavirus pandemic is worsening, as well as fears that further fiscal stimulus will fall to materialize.

The Dow Jones Industrial Average tumbled over 920 points or 3.32%. Meanwhile, the S&P 500 sank 2.65% while the Nasdaq Composite dropped 2.3%. The Dow is on pace for its worst day since June 11, when it fell more than 6%, while the S&P 500 was headed for its biggest one-day sell-off since Sept. 8, just short of a couple of weeks ago, and days after the stock rout began.

The major stock index ETFs are also sinking again Monday along with their underlying benchmarks, with the SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) all tumbling. The iShares Core S&P 500 ETF (IVV) fell over 2.27% Monday as well.
Issues with the coronavirus have continued to plague the globe, and the U.K. is apparently investigating another national lockdown to stymie an explosion in coronavirus cases. The U.K.’s benchmark index, the FTSE 100 sold off over 3% as traders feared the worst.
Meanwhile, while U.S. stocks are red across the board, those hit hardest by a lockdown, such as travel and leisure stocks, are falling the most. Shares of Carnival Corp. sank 4%. Southwest Airlines and Delta Air Lines dropped 4.6% and 7.2%, respectively. Meanwhile, the U.S. Global Jets ETF (JETS) tumbled over 7% amid the news.
“It seems like the biggest reason for the decline in most global stock markets is the concern that tighter virus restrictions in Europe will result from the new spike in Covid cases now that the colder weather is upon us,” Matt Maley, chief market strategist at Miller Tabak, said in a note on Monday.
Stimulus bill negotiations could also become more challenging following the death of Supreme Court Justice Ruth Bader Ginsburg, which could result in a contentious nomination process before the election, as Trump is at odds with Democrats, who have already been in a stalemate over additional stimulus since July. Chris Krueger, Washington strategist at Cowen, said in a note that a fresh coronavirus stimulus bill is now “unlikely until post-Nov. 3 as the fight over Justice Ginsburg’s empty seat will consume D.C.”

This is the third week that stock markets have been falling. The tech-based Nasdaq Composite continues its correction territory, sinking over 10% from its recent record high, while the S&P 500 has fallen 5% alone in September.

“For the market to hold these levels buyers have to come into the technology sector over the next week to 10 days,” said Marc Chaikin, CEO of Chaikin Analytics, in a post. “Without the impetus of the call option buyers who helped propel the large-cap tech stocks to extreme valuations, it is unlikely that the subsequent rally can exceed the September peak.”

“The other narrative is that this avails Democrats to run the successful 2018 playbook again: GOP trying to take away healthcare,” he said.

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