Wall Street Tumbles at Open on News of Virus Strain; Dow Down 190 Pts

By Geoffrey Smith 

Investing.com — U.S. stock markets opened sharply lower on Monday, as news of the discovery of a new strain of the Covid-19 virus prompted fears of tighter lockdowns and more economic damage, especially in Europe.

Markets were also selling the fact of a fiscal relief package agreed by Congress over the weekend, after buying heavily into the rumor during months of negotiations beforehand. Lawmakers have agreed a $900 billion package that will help stave off the worst effects of the pandemic’s latest wave, which has seen layoffs rise and economic activity slow sharply in recent weeks.

By 9:35 AM ET (1435 GMT), the Dow Jones Industrial Average was down 193 points or 0.6% at 29,986 points. The Dow Futures contract had traded down more than 600 points overnight, so that represents something of a recovery.

The S&P 500 was down 0.9% and the Nasdaq Composite was down 0.6%

Among the big outperformers were banking stocks, after the Federal Reserve said it will allow banks to resume stock buybacks from the first quarter of next year. JPMorgan (NYSE:JPM) stock rose 3.4% in response to the bank’s statement on Friday that it intended to launch a new $30 billion buyback program in the first quarter, while Morgan Stanley (NYSE:MS) stock rose 4.9% to a new 52-week high, while Bank of America (NYSE:BAC) stock and Citigroup (NYSE:C) stock also both rose over 3%. Nike (NYSE:NKE) stock also bucked the trend, the sports gear company rising 6.0% after a handsome earnings beat on Friday evening.

Elsewhere, Tesla (NASDAQ:TSLA) stock fell 6.2% on its first day of trading as an S&P 500 stock. Retail investors who ran the stock up aggressively ahead of its inclusion in the index now have a reduced incentive to hold it, after passively-managed funds that track the S&P were effectively forced to include it in their portfolios. A brief exchange between CEO Elon Musk and a Bitcoin enthusiast prompting him to convert the cash on Tesla’s balance sheet into digital currency may also have unsettled some investors (albeit while inspiring others). Musk had tweeted a suggestive picture at the weekend giving the impression that he wanted to invest in Bitcoin.

As so often happens with negative news about the coronavirus, travel stocks were among the hardest hit, as investors pushed back their expectations for the travel industry to return to normal. Newly-listed Airbnb  (NASDAQ:ABNB), whose IPO two weeks ago was supported by heavy interest in ‘reopening’ trades, fell 6.8%. It’s still trading at more than double its IPO price, however.