U.S. stocks pared losses as investors weighed the implications of President Donald Trump’s positive test for the coronavirus with renewed efforts in Washington to reach a compromise on fiscal stimulus.
After dropping as much as 1.2 per cent, the S&P 500 Index cut its decline almost in half following comments from House Speaker Nancy Pelosi that she would work to find compromise with Republicans on a bill. A disappointing jobs report that showed less hiring than analysts had estimated underscored the urgency to push through an aid measure to help U.S. workers.
Crude oil tumbled for a second day. The yen, often seen as a haven in times of market stress, rose slightly amid the increased uncertainty in the runup to the Nov. 3 presidential election.
Traders had already been bracing for turmoil ahead of the ballot and in the months afterward, and the CBOE Volatility Index, known as Wall Street’s fear gauge, jumped the most in a month at one point Friday before paring the increase.
“Whether it’s the president’s health situation or the payrolls report, this pandemic is still very much with us,” Anastasia Amoroso, head of cross-asset thematic strategy at JPMorgan Private Bank, said in an interview on Bloomberg Television. “This really raises the specter of the importance for getting the fiscal stimulus done and for making sure people have access to enhanced unemployment benefits.”
Trump’s diagnosis adds to gloomy developments around the virus as big cities once again turn into hotspots. New York reported the most new cases since May, while London is said to be at a “tipping point” with infections continuing to rise. Thousands of job cuts this week showed how firms are still wrestling with readjustments needed to survive.
In Europe, the pound gained on news U.K. Prime Minister Boris Johnson will intervene in the Brexit negotiations for the first time since June when he holds talks with his European counterpart on Saturday.
Investors will also be watching this weekend for news on Trump’s health and the spread of the coronavirus.
“To the extent that government functions as normal, markets will be concerned, but not necessarily panic,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “However, this incident highlights how COVID-19 continues to be a threat to the economy and markets.”
These are the main moves in markets:
Stocks
The S&P 500 Index fell 0.7 per cent as of 10:27 a.m. New York time.
The Stoxx Europe 600 Index declined 0.2 per cent.
The MSCI Asia Pacific Index declined 0.4 per cent.
The MSCI Emerging Market Index decreased 0.1 per cent.
Currencies
The Bloomberg Dollar Spot Index increased 0.1 per cent.
The euro dipped 0.3 per cent to US$1.1716.
The British pound advanced 0.2 per cent to US$1.2921.
The Japanese yen strengthened 0.2 per cent to 105.35 per dollar.
Bonds
The yield on 10-year Treasuries rose two basis points to 0.69 per cent.
Germany’s 10-year yield was little changed at -0.54 per cent.
Britain’s 10-year yield rose two basis points to 0.25 per cent.
Commodities
West Texas Intermediate crude sank 3.2 per cent to US$37.50 a barrel.
Gold fell 0.2 per cent to US$1,902.12 an ounce.
