stock chart with bars, lines

U.S. stocks continued their decline on Monday, finishing close to 2% lower in the Dow Jones Industrial Average and about 1.3% lower in the S&P 500 as the Cboe Volatility Index (VIX) jumped to its highest level in weeks.

The declines were sharply larger during the session but shrank by the close. The Dow, for example, finished down 500 points after falling as much as 800 points during the session.

A number of factors contributed to the decline, including rising deaths from COVID-19 both here and abroad — U.S. deaths are closing in on 200,000 — a scathing investigation of global banks and growing unease about the U.S. economic outlook as expectations for any additional fiscal stimulus fades.

“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.”