The S&P 500 Index fell 3.5% Wednesday, the biggest drop since June 11, amid a surge in Covid-19 hospitalizations, especially in the Midwest. European stocks also tumbled, as France imposed a new nationwide lockdown and Germany moved to implement one-month partial restrictions.
Asian stocks emerged less scathed as trading opened Thursday, with the MSCI Asia Pacific Index falling 0.6% as U.S. futures turned higher.
With news about Europe’s stricter virus measures “digested,” the market “will switch back to the election,” said Ben Emons, head of global macro strategy at Medley Global Advisors. “The blue wave remains priced in, which means the market will refocus on stimulus.”
House Speaker Nancy Pelosi said she hopes the current selloff in U.S. stocks will prompt President Donald Trump to agree to Democratic demands in stalled stimulus talks and end a three-month stalemate that has added to tension ahead of the Nov. 3 vote. Polls predict Trump will be defeated by Joe Biden, whose Democratic Party is also expected to win control of Congress.
Positive news from Regeneron Pharmaceuticals Inc (NASDAQ:REGN).’s late-stage trial of an antibody cocktail therapy for Covid-19 and possible measures from the European Central Bank should add “positive momentum” heading into the U.S. equity market open Thursday, according to Medley’s Emons. Investors will also be looking toward earnings reports due after the close from major tech companies including Apple Inc (NASDAQ:AAPL)., Amazon.com Inc (NASDAQ:AMZN). and Facebook Inc (NASDAQ:FB).
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