Global equities declined on Monday as record daily coronavirus infections in Europe sparked fears of more severe lockdown restrictions while U.S. investors stayed on the sidelines ahead of corporate earnings season.
U.S. stocks fell on the 33rd anniversary of the 1987 "Black Monday" crash, when the Dow Jones Industrial Average lost 22.6% in one day, equivalent to a drop of about 6,500 points in the index today.
Investors were waiting to see how large companies due to report later in the week, such as Netflix Inc and Tesla Inc, fared in the latest quarter before committing funds, said Dennis Dick, a trader at Bright Trading LLC.
"I think markets are going to lack direction for a couple of days until we get some clarity for how these earnings are going to look," he said.
Investors are also waiting to see whether the final debate between U.S. President Donald Trump and his Democratic challenger Joe Biden on Oct. 22 will shift the trajectory of the election.
Even news of potential progress towards a COVID-19 vaccine was only having a muted impact. Drugmaker Pfizer Inc said on Friday it could have a coronavirus vaccine ready in the United States by the end of this year.
"The market is becoming numb to it to a certain extent because we're getting vaccine headlines every other day," said Dick.
The Dow Jones Industrial Average settled down 410.89 points, or 1.44%, at 28,195.42, the S&P 500 settled down 56.89 points, or 1.63%, at 3,426.92. The Nasdaq Composite settled down 192.67 points, or 1.65%, at 11,478.88.
The dollar edged lower as investors revived bets that an agreement in Washington on a fiscal stimulus package could be reached ahead of the Nov. 3 U.S. election.
The move out of the safe-haven greenback came after House Speaker Nancy Pelosi said that, while differences remained with the Trump administration on a wide-ranging coronavirus relief package, she believed legislation could be pushed through before Election Day.
With investors' risk appetite rising, the dollar index was down 0.41%, giving back some of its 0.7% rise from last week when a global surge in coronavirus cases and an impasse over the stimulus package stoked caution.
Gold rose as the dollar retreated and expectations for a stimulus deal bolstered bullion's appeal as an inflation hedge. Oil futures fell on Libya's plan to boost output.
European shares closed lower as surging COVID-19 cases raised concerns. Parts of the UK were put into lockdown and France imposed curfews.
The pan-European STOXX 600 index .STOXX closed down 0.3%.
Trading volumes in Europe were sharply lower due to a technical glitch at exchange operator Euronext, which led to trading activity being halted in the Amsterdam, Brussels, Lisbon and Paris bourses.
In Asia, investors took comfort from China's third-quarter economic recovery as consumers shook off their coronavirus caution.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5% for a second straight day of gains, paring back following third-quarter gross domestic product data from China.
In currency markets, sterling rose after the European Union said it was ready to intensify talks towards a deal on future trade ties with Britain. Sterling rallied back to near $1.30 levels against the dollar on Monday, up 0.5% at $1.2980 while the euro meanwhile traded 0.3% higher at $1.1756.
The Chinese yuan reached a fresh 1-1/2-year high against the dollar, while the dollar slipped 0.4% to 93.295 against a basket of six major currencies. [USD/]
Spot gold rose 0.4% to $1,906.36 per ounce. U.S. gold futures settled up 0.3% at $1,911.70.
Brent crude futures settled down 0.7% at $42.62 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures settled 0.1% lower at $40.83 per barrel.
(Additional reporting by Swati Pandey in Sydney and Thyagaraju Adinarayan in London; Editing by Chizu Nomiyama, Nick Zieminski and Richard Chang)
