Giving Up on Stimulus

By Alex Eule |  Monday, October 26 Capitulation. After months of indifference, investors have begun to worry about Covid-19 again, and its existing -- and potential -- impact on the economy.  With consecutive days of record case counts in the U.S., along with the decreasing likelihood of a near-term stimulus, markets fell hard today. The Dow Jones Industrial Average fell 650 points, or 2.3%, its worst day in more than six weeks. The S&P 500 lost 1.9%. Just one stock in the Dow managed to gain ground on the day. "Today represented a final capitulation in the hope that a stimulus package would be passed before the election," Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, wrote. Investors have spent months getting used to the uncertainty of the virus, but unknowns about the election might be one ingredient too much. Here's an assessment from Brian Price, head of investment management, for Commonwealth Financial Network:  The biggest risk appears to be the threat of a contested election and the country not knowing the winner of the presidential election next Tuesday night. It’s hard to envision a scenario where that is not a decided “risk off” environment for equities. I think that investors are taking some chips off the table or increasing their hedging positions in advance of what could be a tenuous period for risk assets.    Tech investors also got a warning sign today, after German software firm SAP said that "demand recovery has been more muted that expected." The firm blamed new lockdowns in Europe and said Covid-19 was now expected to impact demand "through at least the first half of 2021 pushing out the achievement of key metrics ... by 1 to 2 years." SAP shares, which trade on the New York Stock Exchange, finished the day down 23%. Software and cloud peers also fell on the news, including Oracle, down 4%, and Workday, down 6.2%  Microsoft has the chance to refute, or confirm, the SAP worries tomorrow, when it posts quarterly earnings, making it the first of this week's five Big Tech reports.