Major indices tumbled Friday morning as investors sold off shares following President Donald Trump’s announcement that he had tested positive for the coronavirus.
The Dow Jones Industrial Average fell by around 375 points, the S&P 500 dropped nearly 1.5 percent, and the tech-heavy Nasdaq composite index fell by over 2.2 percent.
Sectors that depend heavily on a successful reopening of the economy were also down, with Carnival, Royal Caribbean and Norwegian cruise line stocks all falling by around 4 percent each. Southwest Airlines, United Airlines, American Airlines and Delta Air Lines were down by around 3 percent.
Assets seen as safe havens during volatility rallied, with the dollar and yen rising. Gold initially rose but pared gains to trade at $1,907. Crude oil prices dropped to $37 a barrel.
“The news came as a shock to investors, and the uncertainty of what lay next was quickly priced into markets,” wrote Peter Essele, Head of Portfolio Management for Commonwealth Financial Network, in an email.
“It seems reasonable to assume that markets will be on shaky ground throughout October with the perfect storm of a highly contentious election and a pandemic that remains stubbornly at the forefront,” he said. “There remains a very real possibility that the market’s gains over the previous two quarters will steadily erode in the months ahead as we close out a year that many would like to forget.”
Analysts said there could still be surprises in the market reaction as the president’s diagnosis could spur legislative action to tackle the coronavirus and economic crisis with a fresh round of support.
“Initial market reactions to the news that President Trump tested positive for Covid-19 are as expected — negative,” wrote Jamie Cox, Managing Partner for Harris Financial Group, in an email.
“However, markets could have some unexpected reactions as this could break the log jam in current stimulus negotiations,” Cox wrote.
Friday also saw the release of a crucial monthly jobs report, the last snapshot of the economy before Election Day. Data from the Bureau of Labor Statistics showed that just 661,000 jobs were added during the month of September.
Of the 22 million jobs initially lost in the first months of the pandemic, only 11.4 million have been recovered so far.
“The market move is less about the election and more about the possibility that the U.S. president might become incapacitated,” David Stubbs, head of markets strategy at JPMorgan International Private Bank told Bloomberg. “This would inject significant uncertainty into the policy and geopolitical outlook. That is clearly a risk-off event and markets are acting as such.”