Stocks Slump on Bank Report, Economic Doubts

“Basically, the shock and awe era of policy stimulus appears to be in the rear-view mirror,” wrote Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. in her latest market comments. Additional risks for stocks, according to Sonders, were “surging coronavirus cases in Europe, election uncertainty and ongoing pockets of speculative excess — particularly within the options market and driven to a large degree by the short-term trading of many newly minted small investors.” 

Rotation from the five strongest stock performers year to date — Apple, Microsoft, Amazon, Facebook and Google/Alphabet — is also weighing on the market, according to Sonders. She noted that “the move toward more traditional cyclical leadership — materials and industrials — likely also will need support from an improving economic backdrop.” Lacking that economic improvement the rotation could lead to “more broad-based selling of equities.”

Another factor in today’s market slide was a report from the International Consortium of Investigative Journalists on U.S. government documents revealing that several big banks including JPMorgan Chase, Bank of New York Mellon, HSBC and Deutsche Bank profited from business with “shadowy characters and criminal networks” even after they were fined for “earlier failures to stem flows of dirty money.”