Wall Street tumbles as virus cases soar, stimulus hopes fade

© Reuters. FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City

By Medha Singh and Shivani Kumaresan

(Reuters) - U.S. stocks decline picked pace on Monday afternoon, setting the Dow for its worst day in more than seven weeks, as soaring coronavirus cases and a political deadlock over the fiscal relief bill raised doubts about the fate of the economy recovery.

New infections have touched record levels in the United States, with El Paso in Texas asking citizens to stay at home for the next two weeks. In Europe, Italy and Spain imposed new restrictions.

Travel-related stocks, vulnerable to COVID-19 related curbs, dropped. The S&P 1500 airlines index fell 5% and cruise line operators Carnival (NYSE:CUK) Corp and Royal Caribbean (NYSE:RCL) Cruises Ltd shed more than 9.5% each.

"People are nervous about the expansion in cases," said Christopher C. Grisanti, chief equity strategist, MAI Capital Management, Cleveland, Ohio.

"The administration has said it does not want to slow down the economy yet as cases rise they may not have a choice."

Energy index tracked a more than 3% fall in oil prices. Other economically-sensitive industrials and financials sectors posted the steepest percentage declines among S&P sectors. (O/R)

Meanwhile, chances of a fiscal stimulus before the presidential election faded as U.S. Treasury Secretary Steve Mnuchin said there were a number of areas in House Speaker Nancy Pelosi's plan that President Donald Trump cannot accept.

Wall Street's fear gauge hit a near seven-week high even as 60 million Americans voted in a record breaking early turnout as Trump and his Democratic challenger Joe Biden enter their final week of campaigning.

It is also one of the busiest weeks of the third-quarter earnings season that will see results from mega-cap U.S. tech firms including Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Google-parent Alphabet (NASDAQ:GOOGL) Inc and Facebook Inc (NASDAQ:FB).

The tech sector, which includes Apple, is among the only three sectors apart from healthcare and consumer staples that is expected to post an increase in profit compared to a year earlier.

Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5% of them have beaten Wall Street expectations, according to Refinitiv data. At 12:30 p.m. ET, the Dow Jones Industrial Average fell 767.14 points or 2.68% to 27,577.43, the S&P 500 lost 73.59 points or 2.11% to 3,392.13 and the Nasdaq Composite lost 201.99 points, or 1.75% to 11,347.51.

Software company Oracle Corp (NYSE:ORCL) fell about 4% after German rival SAP abandoned medium-term profitability targets and warned of a longer than expected recovery time from the pandemic hit.

Hasbro Inc (NASDAQ:HAS) tumbled 10% as quarterly adjusted revenue fell due to coronavirus-led delays in the production of movies and TV shows.

Companies deemed stay-at-home winners including Amazon.com Inc, Zoom Video Communications (NASDAQ:ZM) Inc and video game companies Activision Blizzard Inc (NASDAQ:ATVI) and Take-Two (NASDAQ:TTWO) Interactive Software Inc rose between 2.2% and 0.3%.

Declining issues outnumbered advancers for a 7.91-to-1 ratio on the NYSE and for a 5.00-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and two new lows, while the Nasdaq recorded 24 new highs and 38 new lows.