S&P 500 sinks as virus leads to more shutdowns

The Dow Jones Industrial Average sank 943 points Wednesday as surging coronavirus cases forced more shutdown measures in Europe and raised fears of more restrictions in the U.S.(Oct. 28)

Video Transcript

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SAM STOVALL: Yeah, the market is right now looking at the word uncertainty in all capital letters. Because we are less than a week away from the presidential election. That's adding uncertainty because the presidential predictor-- which is a positive move in the stock market from July 31 through October 31-- points to an incumbent's re-election. Right now, it's less than 1 percentage point above where it was in July. We have had a third wave of COVID, which is now spiking higher than the second or the first waves. And that is causing concern, especially because you've had a nationwide lockdown take place in France, threatening the risk of a double-dip recession over there. So I think that investors are just saying, you know what? Maybe it's best for me to take some profits while I can, and wait for these uncertainties to work themselves out.

The S&P is still up for the year. So interestingly enough, the market continues to show some resilience. I think what we are simply doing is retesting the late September low, in which the S&P fell by 9.6% after hitting an all-time high on September 2nd. Well, it's fairly typical for volatility to be high, especially in October. October is the most volatile month of the year, having more than 36% more volatility than the average for the remaining 11 months of the year. So like Bette Davis once said, fasten your safety belts. It's going to be a bumpy ride.