Wall Street fell sharply on Monday as hopes faded for a fresh round of fiscal aid and the number of new coronavirus cases surged, reflecting a rising risk of more lockdowns and a slower economic recovery.
The Dow Jones Industrial Average closed 650 points lower, after dropping by more than 950 points, or almost 3.5 percent. The S&P 500 closed down 1.86 percent and the Nasdaq Composite ended the day lower by 1.64 percent.
The total number of coronavirus cases has now reached 8.6 million, with over 225,000 deaths and a rising number of hospitalizations.
White House Chief of Staff Mark Meadows told CNN on Sunday that the Trump administration will "defeat" the pandemic, "because we're Americans."
"What we have to do is make sure we fight it with therapeutics and vaccines, take proper mitigation factors in terms of social distancing and masks when we can," Meadows said. "It is a contagious virus, just like the flu."
The stock slump also comes amid stalled hopes for a final agreement on a new round of fiscal aid for the millions of families affected by the coronavirus pandemic.
Negotiations between House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Steven Mnuchin "have certainly slowed down," White House economic adviser Larry Kudlow told CNBC on Monday morning. "We are close, but there are still important policy issues that separate us."
"I think the recovery, although there's a lot more work to do... is proceeding probably faster than most folks thought," Kudlow added.
The travel and hospitality sector took the heaviest hit Monday, with Wynn Resorts down 6 percent by early afternoon, American Airlines down 7 percent, and Norwegian Cruise Lines down by more than 10 percent.
Tech stocks also faltered, after SAP, one of Europe's key software companies, cut its outlook for 2020 amid signs that businesses are pulling back their spending.
This is the last full week before Election Day, and the economy remains a priority for both presidential candidates as they conclude their campaigns amid a backdrop of fast-rising economic uncertainty.
A growing number of Wall Street participants are concluding that a “blue wave” in November is the nation’s best shot at economic recovery. While markets generally favor the lower tax rates and regulatory rollbacks that are the hallmark of a Republican administration, the unprecedented job loss and economic disruption caused by the coronavirus pandemic has left many market watchers concluding that a united government might be better equipped to provide the critical fiscal support a bitterly partisan Congress cannot.