Stocks, which had surged more than 500 points earlier in the day Monday in a solid rally, reversed course suddenly and late in the session on dishearteninng news that California was reinstating a lockdown as COVID-19 cases continued to rise in the state.
The Dow Jones Industrial Average had been up 564 points as earnings kicked off and as two drug companies, Pfizer and Germany’s Biontech, said they were fast-tracked by the U.S. Food and Drug Administration to develop two potential COVID-19 vaccines. The S&P 500 briefly turned positive for the year to date.
The rally had puzzled some pundits given the accelerated spread of the pandemic in many states in the South and West, but investors appeared hopeful on the economy and government stimulus efforts and encouraged by possible vaccine advances. But around 3 p.m. ET, as the market entered the last hour of trading, California Gov. Gavin Newsom flipped a switch when he announced the state is closing indoor operations for movie theaters, restaurants, bars, wineries, family entertainment, zoos and museums across regions effective today. Los Angeles County Public Health Director Barbara Ferrer announced shortly after that the indoor closure list includes “offices for all non-critical sectors.”
The move came as the state revealed 8,358 new cases reported over the past 24 hours and 7,000 deaths.
Other states are tightening up social distancing restrictions and big Wall Street firms are joining health officials in noting the urgency of masks. Goldman Sachs said last week that a national mask mandate could prevent a 5% drop in GDP.
The DJIA ended the day basically flat (up 10 points), while the S&P 500 closed down by 0.94%. The Nasdaq was hardest hit, finishing the session down 2.3%.
It was the unoffical kickoff of earnings that included strong numbers for PepsiCo, which revealed an unsurprising bonanza in snack sales last quarter. Banks report tomorrow. Netflix, the first big-cap media company in the lineup, announces earnings Thursday. Its shares closed down 4.23%, a major dip for the streaming giant that’s been a sector leader throughout the pandemic.
Disney fell 2.6%. The company opened Walt Disney World this weekend despite a record spike in coronavirus cases in the state. Things change daily. Today, Hong Kong said Hong Kong Disneyland will close as the virus took new hold in some foreign markets.
Apple and Amazon hit highs before succumbing to the selloff. Amazon ended down 3% and Apple was off 0.46%.
Comcast held in positive territory, ending a hair higher, up 0.7% at $40.54.
Amazon hit a new high before reversing course.