Stocks slumped to an eight-week low amid warnings from Federal Reserve officials on the need for more stimulus to lift the world’s largest economy from a coronavirus-induced recession. The dollar rallied.

The S&P 500 closed near the threshold that many investors consider to be a market correction, while the Nasdaq 100 tumbled more than 3 per cent, led by giants Apple Inc. and Inc. Fed Chairman Jerome Powell reiterated there’s a long way to go for the economic rebound, which will likely require more support. The need for further aid was also stressed by Vice Chairman Richard Clarida, Governor Randal Quarles and regional chiefs Charles Evans, Loretta Mester and Eric Rosengren.

The warnings come days after Congress all but ended its pursuit of a bipartisan spending bill to focus on replacing Ruth Bader Ginsburg on the Supreme Court. It’s another blow to investors who are also watching virus cases tick higher in the U.S. amid a resurgence in infections around the world. Traders are growing cautious about the strength of the economic recovery, with the chances for Congressional stimulus withering ahead of a contentious election battle. The benchmark gauge of U.S. equities is poised for its first monthly slide since March.

“Markets are digesting and grappling with this idea that the growth expectations that investors have might not materialize,” said Lauren Goodwin, economist and multi-asset portfolio strategist at New York Life Investments. “As the fiscal impulse in the U.S. starts to wane, some of these expectations for a slow and steady recovery are shaken.”

On corporate news, Tesla Inc. plunged after its “Battery Day” event fell short of expectations. Nike Inc. rallied on solid earnings, while GoodRx Holdings Inc. -- which operates a telemedicine site and platform to track drug prices -- surged in its trading debut.

These are some events to watch this week:

  • Powell and Treasury Secretary Steven Mnuchin will testify before a Senate committee on the economic response to the pandemic on Thursday.
  • U.S. initial jobless claims are due Thursday.

Here are some of the main moves in markets:


  • The S&P 500 declined 2.4 per cent at 4 p.m. New York time.
  • The Stoxx Europe 600 Index rose 0.6 per cent.
  • The MSCI Asia Pacific Index fell 0.2 per cent.


  • The Bloomberg Dollar Spot Index jumped 0.7 per cent.
  • The euro fell 0.4 per cent to US$1.1659.
  • The Japanese yen depreciated 0.4 per cent to 105.40 per dollar.


  • The yield on 10-year Treasuries rose less than one basis point 0.68 per cent.
  • Germany’s 10-year yield was unchanged at -0.51 per cent.
  • Britain’s 10-year yield increased two basis points to 0.218 per cent.


  • West Texas Intermediate crude fell 0.7 per cent to US$39.52 a barrel.
  • Gold depreciated 2.1 per cent to US$1,859.48 an ounce.
  • Silver depreciated 7.3 per cent to US$22.62 per ounce.

--With assistance from Constantine Courcoulas, Adam Haigh, Todd White, Cecile Gutscher, Lynn Thomasson, Vildana Hajric, Claire Ballentine and Nancy Moran.