New York Stock Exchange closes sharply lower on fears of a slowing economy

WALL STREET’s main indexes fell sharply on Wednesday after data showing a cooling of US business activity and the stalemate in Congress over more fiscal stimulus heightened concerns about the economy while the coronavirus disease 2019 (COVID-19) pandemic remains unchecked.

The Nasdaq and S&P 500 fell more than 2%, and all 11 of the major S&P sectors closed lower. Energy — already the worstperforming sector this year — led the rout in its biggest single-day decline since July 9.

Hopes of a strong recovery and historic stimulus fueled the US stock rally following the coronavirus-driven crash in March. But doubts over another relief bill and a selloff in heavyweight technology-related stocks have weighed on sentiment since the market peaked on Sept. 2. Wednesday’s plunge came six months to the day that US stocks on March 23 tumbled to their lowest point during the pandemic-induced selloff. The economy is now leveling off at about 80% of activity before the pandemic and won’t get back to normal until a vaccine is in place, said Jason Pride, chief investment officer of private wealth at Glenmede in Philadelphia.

Investors are struggling to understand where to invest with mega-cap tech stocks trading well above their long-term fair value, but the deep-value stocks represent maturing industries, such as energy and brick-and-mortar banks, he said.

Federal Reserve Chair Jerome Powell said on Wednesday that the central bank was not planning any “major” changes to its Main Street Lending Program, while saying that both the Fed and Congress need to “stay with it” in working to bolster the economic recovery.

Data from IHS Markit showed gains at factories were offset by a slowdown in the broader services sector in September, suggesting a loss of momentum in the economy at a time when concerns are rising about a potential surge in COVID-19 cases heading into the colder months.

Meanwhile, the US Justice Department unveiled a legislative proposal, which would need congressional approval, that seeks to reform a legal immunity for internet companies and follows through on President Donald Trump’s bid from earlier this year to crack down on tech giants.

Wall Street favorites including Apple, Inc., Google- parent Alphabe, Inc. and Amazon.com, Inc., which have borne the brunt of recent losses, again declined at a rate exceeding losses of the benchmark S&P 500. A decline in Facebook, Inc. came in below the S&P drop.

The S&P 500 skidded to lows last seen in late July and is now down 9.6% from its record high hit three weeks ago. That puts it less than half a percentage point from entering corrective territory, as the Nasdaq did last week.

The Dow Jones Industrial Average fell 525.05 points or 1.92% to 26,763.13. The S& P 500 lost 78.65 points or 2.37% to 3,236.92 and the Nasdaq Composite dropped 330.65 points or 3.02% to 10,632.99.

Volume on US exchanges was 10.04 billion shares, up from 8.68 billion shares on Tuesday.

Tesla, Inc., another recent Wall Street darling, tumbled 10.3% after Chief Executive Elon Musk failed to impress with his promise to cut electric vehicle costs at the company’s much- awaited “Battery Day” event on Tuesday.

Declining issues outnumbered advancing ones on the New York Stock Exchange (NYSE) by a 7.80- to-1 ratio; on Nasdaq, a 5.95-to-1 ratio favored decliners. —