Stocks Tumble On Big Banks’ Role In Money-Laundering Report, Fears Of Stimulus Delay

Updated at 2:42 p.m. ET

The Dow Jones Industrial Average dropped more than 800 points Monday following a report that large global banks were involved in transactions flagged as possible money laundering.

And hopes for another stimulus measure from Congress flagged as lawmakers focused on a fight over a Supreme Court nomination following the death of Justice Ruth Bader Ginsburg.

The Dow dove 3% and the broader S&P 500 index fell 2.5% in afternoon trading. The Nasdaq composite index was down 1.6%.

Bank stocks fell after a news report that JPMorgan Chase, Deutsche Bank and other giant banks defied money-laundering crackdowns. JPMorgan Chase fell more than 4%, Citigroup was down 3% and HSBC was down 6%.

A surge in COVID-19 cases in the United Kingdom raised fears of another lockdown there. Lockdowns have ripple effects that hurt several industries, including travel. Airlines stocks plummeted Monday, with United Airlines down 7.5% and American Airlines down 6.4%.

Stocks have had a rough September. The Dow has fallen more than 5% so far this month.

Another factor weighed on the market on Monday. Over the weekend, China announced rules for a new regulatory body that could blacklist foreign companies that unfairly treat Chinese companies or pose a threat to Chinese national security, NPR’s Emily Feng reported.

China has not yet said which companies would be labeled “unreliable entities” but Chinese state media have suggested that U.S. tech companies including Apple, Qualcomm and Cisco would be considered. U.S. tech stocks, which led the market to new records, have been sliding in recent weeks.

The latest tensions with China come as the Trump administration has threatened to bar the Chinese-owned TikTok and WeChat apps in the U.S.

The U.S. economic slowdown amid the coronavirus pandemic also continues to worry investors. Retail sales grew more slowly in August after an extra $600 per week in federal unemployment benefits expired.

The Federal Reserve has cut interest rates to historic lows and says it expects to keep them down through at least 2023, but Congress has been deadlocked about providing additional pandemic economic assistance. The debate over whether President Trump should be allowed to name a successor to Ginsburg could dampen hopes for a stimulus deal.

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