Tech Slide and Pandemic Surge Slam Wall Street

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On Friday, U.S stock indexes closed lower for capping the biggest weekly sell-off on Wall Street since March, as investor sentiment was snuffed by jitters over the upcoming presidential elections, a record increase in coronavirus cases, and losses reported by the prized tech heavyweights. With COVID-19 cases surpassing 9 million in the United States, the hospitals in the country were pushed to the brink of capacity. Concerns about economic recovery intensified due to the prospect of stricter coronavirus restrictions in Europe. The CBOE volatility index was quite close to a 20-week high, an indication that investors have become jittery ahead of the final weekend before Tuesday’s elections. 

Most of the steeper losses were pared by the main indexes towards the closing bell, with the Dow closing down by less than 1%. Market analysts said that with just two market days before Election Day, investors want to ensure that they are not caught off guard completely. There has been an 8.9% decline in the S&P 500 since it reached an all-time high back in September in a rally that occurred due to tech mega-caps, but their third-quarter results this week did not meet the optimistic expectations. There was a 5.6% tumble in Apple Inc., after it reported the steepest drop in quarterly sales of the iPhone in the last two years because of a late launch of the new 5G phones.

There was a 5.45% slide in Amazon.com Inc. after forecasting an increase in costs due to COVID-19, while Facebook Inc. fell by 6.3% with a warning of a difficult 2021. Analysts said that these names would eventually be repriced because they are valued rather ridiculously, but it was unclear as to what value they would be priced at. However, the shares of Alphabet Inc. saw a jump that gave a good boost to communication services. The Google parent surpassed estimates for quarterly sales, as businesses began to advertise once again.

Google may have also benefitted as it is trading at 36 times earnings, but it is far less than Amazon’s valuation of 119 times earnings. The analysts said that big tech names had seen a major selloff because they weren’t able to live up to the hype and now people are concerned about next week’s elections. For months, Democratic challenger Joe Biden has been ahead of Republican rival Donald Trump in national polls, but the polls have also highlighted a closer race in battleground states, which could end up deciding the elections. 

The Dow Jones Industrial Average declined by 0.59% or 157.51 points to reach 26,501.6, whereas the S&P 500 saw a fall of 1.21% or 40.15 points to reach 3,269.96. The Nasdaq Composite, on the other hand, slumped by 2.45% or 274.00 points to reach 10,911.59. The total volume on U.S. exchanges was around 10.31 billion shares. The third-quarter earnings report season is almost through its halfway mark. The overall profit is expected to decline by 10.3% this year, as opposed to last year.