Stock sell-off accelerates and is expected to get worse before it gets better

Stock investors focused on new worries about the coronavirus and economy, selling into a market Monday that was already technically shaken and set for further declines.

But Monday’s sharp sell-off was different than the September slump that has centered on tech and growth stocks. Instead it was led by the cyclical names that had been gaining on expectations for a recovering economy, and not so much by the frothy growth names that have been correcting.

“Things had to have changed for investors to be so nervous,” said Sam Stovall, chief market strategist at CFRA. “With Europe starting to see a sharp increase in Covid cases, does that mean they ’re going to reimpose shutdowns?”  The U.K. government’s top scientists warned the country could expect to see almost 50,000 new coronavirus cases per day in mid-October if no action is taken.

Another factor is the political uncertainty following the death of Supreme Court Justice Ruth Bader Ginsburg, with Republicans moving to replace her immediately and Democrats pushing for a delay until after the inauguration in January. That has intensified an already contentious divide, increases election uncertainties, and makes it less likely Congress will be working together on a stimulus package to support the economy, analysts said.