- October 3, 2020
- Posted by: Stratford Team
- Category: Business
Stocks went on a wild roller coaster ride Friday after President Trump announced via tweet the night before that he and the First Lady had both tested positive for the deadly coronavirus.
The Dow Jones industrial average plunged more than 433 points at the open before bouncing back renewed hopes for a stimulus package as well as reports that POTUS was experiencing “mild symptoms.”
The Dow closed down 134.09 points or 0.48 percent to 27,382.94 after dropping 433.96 points at the session low. The benchmark S&P 500 ended down 0.9 percent to 3348.42 while the tech-heavy Nasdaq closed the day down 2.2 percent to 11,075.02.
The indices were buoyed in part by the White House’s late morning announced that Trump was feeling “energetic” and had only mild symptoms, easing uncertainty about whether the virus would affect his ability to govern.
“That changed the direction of the fear-trade,” Quincy Krosby, chief market strategist at Prudential Financial, told The Post.
Lawmaker’s promises from another relief package also helped soothe investors’ spirits. While stimulus talks are still at a logjam, House Speaker Nancy Pelosi said more aid was on the way for struggling airlines, which sent the industry’s stocks higher. An aid package could help stave off tens of thousands of job cuts like those announced this week by major US carriers United and American.
Of course, even if a stimulus package is passed, the uncertainty created by Trump’s shocking diagnosis could hang over markets for some time. The fluidity of the situation was underscored when, after markets closed Friday, officials announced that Trump was being taken to Walter Reed Military Medical Center as a “precautionary measure.”
The CBOE Volatility Index — known as Wall Street’s “fear gauge” — climbed to its highest level in a week at one point on Friday, up about 4.3 percent at 27.86, indicating that investors are bracing for a rocky road ahead.
“Volatility was expected this fall as the presidential election cycle kicked into full gear and we faced our first test of the possibility of a resurgence of flu cases, but markets weren’t likely pricing in the president getting infected,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
In addition to governance concerns, investors are also nervous about who else in Trump’s orbit might have contracted the disease.
Vice President Mike Pence and his wife Karen Pence have both tested negative, according to Pence’s spokesman. Treasury Secretary Steve Mnuchin also tested negative, his spokesperson said.
The diagnosis has also stoked fears that the pandemic is flaring up yet again, which threatens to slow an already painful recovery, according to Anthony Denier, CEO of trading platform Webull.
“It almost kind of confirms our fear that the second wave is coming,” Denier told The Post. “It’s not just a Dr. Fauci scandal as someone on 4Chan would talk about.”