(Bloomberg) — Stocks tumbled in the U.S. and Europe as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from the pandemic.

The S&P 500 Index fell almost 3%, headed for the biggest drop since early September, amid a surge in Covid-19 hospitalizations, especially in the Midwest. Energy shares sank as oil prices declined, and technology stocks were also among the worst performers.

Boeing Co. slumped to a one-month low as it announced plans for more job cuts. Microsoft Corp. declined as investors focused on a forecast that fell short of analysts’ highest projections, looking past a decisively upbeat profit and sales report. General Electric Co. gained after reporting a surprise profit.

The Stoxx Europe 600 Index fell to a five-month low and sank more than 3% after German Chancellor Angela Merkel proposed closing bars and restaurants for a month to curb the spread of the virus. Auto and real-estate shares saw the steepest declines.

Haven assets, such as Treasuries and German bunds, advanced. The VIX Index, a measure of U.S. equity volatility, climbed to the highest level since June.


chart: VIX measure of implied U.S. equity swings shows price spike for hedging

© Bloomberg VIX measure of implied U.S. equity swings shows price spike for hedging

Markets in the U.S. and Europe have retreated sharply this week as virus cases surge and American lawmakers fail to agree on an economic aid package before the Nov. 3 election. Analysts are also warning about increased volatility in markets ahead of the presidential vote and in its aftermath, with some saying that a contested outcome is still a possibility.

“With rising Covid cases, markets are afraid policy makers will react with another harsh lockdown,” said Bill Callahan, an investment strategist at Schroders. “These stocks that really depend on people going back to their daily habits are really being impacted right now.”

Elsewhere, oil fell sharply on concern lockdowns will sap demand. Bitcoin headed to its biggest drop in almost two months after reaching the highest since January 2018.

In Asia, stocks fared better. The MSCI Asia Pacific Index edged lower on Wednesday, and markets in South Korea and Shanghai posted modest gains. In China, indicators tracked by Bloomberg showed the recovery continued to display mixed signals while remaining broadly steady in October.

These are some events to watch this week:

Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.The Chinese Communist Party’s Central Committee holds its plenum through Friday, where it’s expected to chart the course for the economy’s development for the next 15 years.Brexit negotiating teams have started intense daily talks, and these are likely to continue as both sides push to finalize a deal by the middle of November.The first reading of U.S. third-quarter GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the main moves in markets:

Stocks

The S&P 500 Index dropped 2.8% as of 10:30 a.m. New York time.The Stoxx Europe 600 Index decreased 3.2%.The MSCI Asia Pacific Index fell 0.6%.

Currencies

The Bloomberg Dollar Spot Index increased 0.7%.The British pound declined 0.5% to $1.2982.The Japanese yen gained 0.1% to 104.28 per dollar.

Bonds

The yield on 10-year Treasuries fell two basis points to 0.75%.Germany’s 10-year yield dipped one basis point to -0.63%.Britain’s 10-year yield decreased one basis point to 0.22%.

Commodities

West Texas Intermediate crude sank 6.1% to $37.15 a barrel.Gold weakened 1.7% to $1,876.57 an ounce.

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