The optimism that we saw at the beginning of the week built on Pfizer’s vaccine news was not strong enough to face the explosive surge in coronavirus cases in the US.
All the major US indexes registered losses this Thursday. The S&P 500 dropped 1.00%, the Dow fell 1.08%, and the Nasdaq Composite was 0.65% down.
On Wednesday, the new coronavirus daily cases in the US hit a new record, with more than 144,000 diagnoses.
It was the ninth straight day of new cases above 100,000.
The seven-day average of 127,600 cases is about 35% higher than a week ago.
According to a CNBC analysis based on Johns Hopkins University data, average daily new cases increased at least 5% over the last week in at least 47 states and D.C. as of Wednesday.
The hospitalizations are also rising quickly. For the first time, the country has more than 65,000 Covid-19 patients in hospitals.
The seven-day average of hospitalized patients is up by at least 5% in 46 states. Hospitals in Wisconsin, parts of Texas, Utah, and the Dakotas are already full.
On Wednesday, the US recorded about 2,000 deaths, the highest number since May.
November is on track to be the worst month of the pandemic so far in the US.
This scenario is making investors fear again about the economic recovery next year.
The spike in the cases is spreading worries that states will impose new restrictions.
And some of them have already announced new rules.
Starting Friday, New York, for example, will limit private gatherings to 10 people (the rule also applies to private homes) and require bars and restaurants to close at 10 pm.
Connecticut has also limited all private gatherings in the state to 10 people and lowered capacity limits on restaurants. Cities will also be able to impose restrictions on other business.
The city of Chicago issued a stay-at-home advisory. Residents should leave home only for work, school, or essential needs like medical care or groceries starting Monday.
In the last few weeks, investors’ focus was on the US election and politics in general, including negotiating the stimulus bill. Now the focus is back to the coronavirus and its impact on the economy.
On Wednesday, Michael Osterholm, a COVID-19 advisor to President-elect Joe Biden, said a US nationwide lockdown lasting four to six weeks would help control the pandemic and revive the US economy.
In an interview for Yahoo Finance, he also said the government could pay to cover all of the lost wages for individual workers and losses to small-medium companies.
It’s important to remember, though, that Democrats haven’t got control of the Senate, and a deal for a big stimulus won’t be easy to reach.
Democrats want a package of at least $2.2 trillion. Republicans offer just $500 billion. The difference is significant in finding a middle ground.