Stocks Plunge As Investors Become Less Optimistic About Economic Recovery
SACHA PFEIFFER, HOST:
A massive spike in coronavirus cases in the U.K., the death of Supreme Court Justice Ruth Bader Ginsburg and a report on money laundering involving some of the world's biggest banks - all three are having a big impact on the stock market today. At one point, the Dow fell as much as 900 points in the morning, and it finished down nearly 2%. Here to explain what's happening is NPR's Jim Zarroli.
JIM ZARROLI, BYLINE: Hi, Sacha.
PFEIFFER: Jim, let's start with the first item on that list, the coronavirus. How is it believed to be playing a role in a drop in the market at this stage in the pandemic?
ZARROLI: Well, you know, the U.S. has been in the middle of a recession that was caused by the pandemic, and it looked for a while like the economy was recovering. I think now people aren't so sure. We're seeing trouble. We're seeing continued cases in the U.S. We're also seeing trouble overseas. There's been talk of another lockdown in England. That really hurts stocks that are tied to the global economy like airline stocks. United was down more than 8% today, Delta down more than 9%. Then look at tech stocks. People have been stuck at home, you know, working remotely. They're using technology more, so stocks like Amazon and Netflix have been hitting record highs. You had Tesla trading at five times what it was trading at when the year began. But now it really looks like Wall Street's love affair with tech stocks is fading.
PFEIFFER: And a lot of stocks were down today, as you said, but bank stocks really fell. Why?
ZARROLI: Well, this is tied to a big report that was put out this weekend by a global coalition of journalists. They got ahold of some documents that big banks file with the Treasury Department when they see illicit activity - anything that might suggest, you know, money laundering, for example. And this report this weekend suggests there's a lot of bad stuff going on. I mean, there's evidence the banks were handling transactions involving, you know, powerful dictators and the Taliban and drug lords. Between 1999 and 2017, banks all over the world reported $2 trillion in potentially illicit activity.
PFEIFFER: Does that potentially mean the banks themselves are guilty of some kind of crime?
ZARROLI: You know, not necessarily. It suggests that they maybe haven't done enough to root out corruption. Remember; banks like Wells Fargo and Deutsche Bank have paid huge fines over the years for various crimes, and they all say they've cleaned house. This report suggests, you know, there's still some sketchy stuff taking place, and this makes investors nervous. So that was enough to send stocks plummeting. JPMorgan Chase, Bank of America - they were all down. Wells Fargo fell more than 4%.
PFEIFFER: And, Jim, the death of Ruth Bader Ginsburg - tell us why that would have an impact on stocks.
ZARROLI: You know, it means there's going to be a big, looming fight in Congress over who will replace her. And remember; investors had been expecting that Congress was going to come up with another stimulus bill, and that hasn't happened. So the two parties are really at odds over that, and now suddenly, it looks like Congress is going to be focused on something else.
PFEIFFER: And what's the theory by analysts on how much the election is weighing on investors' minds and affecting the markets?
ZARROLI: You know, it adds a very big uncertainty factor because not only could we see a change in the White House. The Senate could well flip to Democratic control. And that could just change everything - I mean, taxes and trade and banking regulations, you know, health care. So there are just a lot of unknowns in the economy right now, and the result is what we saw today. We're seeing the stock market become a lot more volatile.
PFEIFFER: NPR's Jim Zarroli, thank you.
ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.