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Stock ETFs Hammered Again as Coronavirus Fears Intensify

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Stocks and index ETFs plummeted once again on Wednesday, amid fears that there will be additional shutdowns, based on the most recent spike in coronavirus infections.

In an echo of Monday’s action, all three of the key benchmark stock indexes are tumbling yet again on Wednesday, in what appears to be a brutal end to October. The Dow Jones Industrial Average plummeted  another 849 points, or 3.06%, while the S&P 500 fell 3.01% and the tech-heavy Nasdaq relinquished 3.19%, as stocks are bathed sea of red.

The major stock index ETFs are also getting blasted on Wednesday along with their underlying benchmarks, with the SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) all broadly lower into the early afternoon session. The iShares Core S&P 500 ETF (IVV) is losing significant ground as well.

U.S. coronavirus cases have surged by a record daily average of 71,832 over the past week, according to data compiled by Johns Hopkins University. Hospitalizations due to Covid-19 have jumped 5% or more in three dozen states, according to data from the Covid Tracking Project. Cases are exploding across Europe too.

The Latest on Coronavirus Repercussions

While there was a respite to the coronavirus pandemic that has rocked the globe since late last year, the recent surge in Covid-19 infections has spurred some countries to reinstitute more stringent social distancing measures. In Germany, for example, Chancellor Angela Merkel called on Wednesday for a limited lockdown. Meanwhile, Reuters reported that France would soon issue a stay-at-home order. In the U.S., Illinois powers have demanded Chicago shutter indoor dining as well.

Despite positive earning news, analysts are leery of serious problems, now that the prospect of a coronavirus stimulus package before the election has encountered seemingly insurmountable headwinds.

“I think there’s going to be a call for lockdowns the likes of which we’ve seen in Chicago,” CNBC’s Jim Cramer said Wednesday. “The lockdowns without the stimulus equals what we’re seeing.”

“It’s a shame because, had there been stimulus, we’d then be focusing on earnings and the earnings are actually pretty darn good,” he said.

Leisure stocks, which are especially affected by a shutdown, have been blasted on Wednesday. Delta Air Lines tumbled 4.3%. Royal Caribbean shares declined 4.2%. Even tech stocks were damaged, with Facebook, Alphabet and Twitter falling over 4% apiece, as their respective CEOs testified in front of Senate members.

Despite the stock and index ETF rout, some analysts are encourage investors to look to the future, rather than run to safety in bonds or metals.

“We believe investors should seek to put further COVID-19-related restrictions in perspective and see market setbacks as an opportunity to build exposure in the winners from the next leg up,” said Mark Haefele, Chief Investment Officer for Global Wealth Management at UBS, in a note.

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