US stocks slumped and bets on volatility increased as traders weighed the implications of President Donald Trump’s positive test for the coronavirus along with renewed efforts in Washington to reach a deal on fiscal stimulus.
The S&P 500 Index pared the worst of its losses following comments from House Speaker Nancy Pelosi that she would work to find compromise with Republicans on a bill. A disappointing jobs report that showed less hiring than analysts had estimated underscored the urgency to push through an aid measure to help US workers. The Nasdaq 100 underperformed amid losses for tech companies including Apple, Microsoft and Amazon.com.
Crude oil tumbled for a second day. The yen, often seen as a haven in times of market stress, edged higher amid the increased uncertainty in the runup to the November 3 presidential election.
Traders had already been bracing for turmoil ahead of the ballot and in the months afterward, and the CBOE Volatility Index, known as Wall Street’s fear gauge, jumped the most in a month at one point Friday before paring the increase.
“Whether it’s the president’s health situation or the payrolls report, this pandemic is still very much with us,” Anastasia Amoroso, head of cross-asset thematic strategy at JPMorgan Private Bank, said in an interview on Bloomberg Television. “This really raises the specter of the importance for getting the fiscal stimulus done and for making sure people have access to enhanced unemployment benefits.”
In Europe, stocks edged higher. The pound gained on news UK Prime Minister Boris Johnson will intervene in the Brexit negotiations for the first time since June when he holds talks with his EU counterpart on Saturday.
Investors will also be watching this weekend for news on Trump’s health and the spread of the coronavirus.
“To the extent that government functions as normal, markets will be concerned, but not necessarily panic,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “However, this incident highlights how Covid-19 continues to be a threat to the economy and markets.”