Wall Street, global markets fall on economy worries

FILE - In this Jan. 27, 2020, file photo, trader Michael Capolino works on the floor of the New York Stock Exchange. Wall Street is opening sharply lower Monday, Sept. 21, 2020, led by financial stocks, after a report alleged banks were profiting from illicit dealings with disreputable people and criminal networks. (AP Photo/Richard Drew, FIle)
FILE - In this Jan. 27, 2020, file photo, trader Michael Capolino works on the floor of the New York Stock Exchange. Wall Street is opening sharply lower Monday, Sept. 21, 2020, led by financial stocks, after a report alleged banks were profiting from illicit dealings with disreputable people and criminal networks. (AP Photo/Richard Drew, FIle)

NEW YORK -- Wall Street slumped Monday as markets tumbled worldwide on worries about the pandemic's economic pain, though the S&P 500 had pared its losses by the end of the day.

The S&P 500 fell 38.41 points, or 1.16%, to 3,281.06. It extends the index's losing streak to four days, its longest since stocks were selling off in February on recession worries. But a last-hour recovery helped the index more than halve its loss of 2.7% from earlier in the day.

The Dow Jones Industrial Average fell 509.72, or 1.8%, to 27,147.70 after coming back from an earlier 942 point slide. The Nasdaq composite slipped 14.48, or 0.1%, to 10,778.80 after recovering from a 2.5% drop.

The drops began in Asia as soon as trading opened for the week, and they accelerated in Europe on worries about the possibility of tougher restrictions there to stem rising coronavirus counts. In the U.S., stocks and Treasury yields weakened, while prices sank for oil and other commodities that a healthy economy would demand.

Wall Street has been shaky this month, and the S&P 500 has dropped 8.4% since hitting a record Sept. 2 amid a long list of worries for investors. Chief among them is fear that stocks got too expensive when coronavirus counts are still worsening, Congress is unable to deliver more aid for the economy, U.S.-China tensions are rising and a contentious U.S. election is approaching.

Investors should expect the stock market to stay volatile, perhaps through the November elections, as they wait for these questions to shake out, said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management.

Monday's selling was exacerbated by worries about the possibility of more business restrictions in Europe, particularly as the United States heads into flu season, Draho said, and "some investors may be stepping aside."

David Joy, chief market strategist at Ameriprise Financial, noted how Monday's sharpest drops were concentrated in areas of the market most closely tied to the economy's strength, such as energy companies and raw-material producers.

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"It seems to be a broader expression of worry about the economy," he said.

Bank stocks took sharp losses after a report alleged that several continue to profit from illicit dealings with criminal networks despite U.S. crackdowns on money laundering.

Shares of electric and hydrogen-powered truck startup Nikola plunged 19.3% after its founder resigned as executive chairman and left its board amid allegations of fraud. The company has called the allegations false and misleading.

General Motors, which recently signed a partnership deal where it would take an ownership stake in Nikola, fell 4.8%.

Investors are also worried about the diminishing prospects that Congress may soon deliver more aid to the economy. Many investors call such support crucial after extra weekly unemployment benefits and other stimulus expired. But partisan disagreements have held up any renewal of what's known as the CARES Act.

"The stimulus money from the CARES Act, the impact of that, is running off and there doesn't seem to be any urgency in Washington to get another package together," said Joy of Ameriprise Financial.

Partisan rancor is only continuing to rise, deflating hopes further. The sudden vacancy on the Supreme Court following the death of Justice Ruth Bader Ginsburg is the latest flashpoint dividing the country.

Tensions between the world's two largest economies are also weighing on markets. President Donald Trump has targeted Chinese tech companies in particular, and the Department of Commerce on Friday announced a list of prohibitions that could eventually cripple U.S. operations of Chinese-owned apps TikTok and WeChat. The government cited national security and data privacy concerns.

That raises the threat of Chinese retaliation against U.S. companies.

A U.S. judge over the weekend ordered a delay to the restrictions on WeChat, a communications app popular with Chinese-speaking Americans, on First Amendment grounds.

Layered on top of all those concerns for the market is the continuing coronavirus pandemic and its effect on the global economy.

The yield on the 10-year Treasury fell to 0.66% from 0.69% late Friday.

Information for this article was contributed by Joe McDonald of The Associated Press.

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