US stocks plunged Monday as fears about a new coronavirus strain emerging in the UK outweighed optimism about Congress passing a new stimulus bill.
The Dow Jones industrial average tumbled as much as 374.57 points, or 1.2 percent, to 29,804.48 in early trading after British officials imposed a strict lockdown on London and other nearby areas over the weekend to stem the spread of the highly contagious strain.
The benchmark S&P 500 likewise sank as much as about 1.8 percent while the tech-heavy Nasdaq posted an early loss as large as 1.6 percent.
The new COVID-19 strain spooked Wall Street despite congressional leaders announcing a roughly $900 billion coronavirus relief package on Sunday. The UK lockdown suggested there may be bumps in the road to recovery that’s being paved as health officials roll out the first coronavirus vaccines that could help end the pandemic.
“Markets have adopted a light at the end of the tunnel approach since Pfizer and Moderna’s vaccines burst onto the stage,” said Jeffrey Halley, senior market analyst at OANDA. “However, the weekend’s events have delivered an unceremonious Monday morning wake-up call that negotiating [the first quarter] of 2021 could be a torturous affair.”
Investors had also been anticipating a stimulus deal for weeks despite the often rocky negotiations in Congress, meaning Sunday’s announcement wasn’t a major cause for celebration.
“The stimulus package was absolutely necessary and expected,” said James McDonald, CEO and chief investment officer of Hercules Investments. “Unfortunately, it won’t be enough to limit the economic fallout of COVID-19 and we will have to go through the process again, perhaps several times, until COVID-19 is behind us.”
Meanwhile, the CBOE Volatility Index — known as Wall Street’s fear gauge — surged more than 46 percent to an intraday peak of 31.46, its highest level since early November.
Wall Street followed European markets lower after Monday’s opening bell. London’s FTSE 100 was recently down about 2.2 percent, while Paris’ CAC 40 and Germany’s DAX were off about 3 and 3.1 percent, respectively.
Oil prices also fell amid the lockdown fears. West Texas Intermediate crude oil futures were down 3.4 percent at $47.41 a barrel as of 10:02 a.m. and Brent crude futures were recently off about 3.5 percent at $50.44 a barrel.
With Post wires
