If President-elect Biden shuts down the US economy, the Dow would drop nearly 4,000 points: strategist

Brian Sozzi
·Editor-at-Large

The last thing bullish post-election season investors want to see is a nationwide lockdown to control the resurgent coronavirus under President-elect Joe Biden.

“3,000 or 4,000 [Dow] points lower at least,” veteran strategist David Nelson of Belpointe Asset Management told Yahoo Finance Live on the market reaction to a possible lockdown.

But that may be what investors are staring down the barrel of if COVID-19 infections and deaths continue to rise ahead of Biden assuming power in late January.

Influential COVID-19 adviser to president-elect Joe Biden Dr. Michael Osterholm told Yahoo Finance Live a four- to six-week national lockdown would be appropriate to get the pandemic under control. Osterholm contends the U.S. has a “big pool of money” to pay for lost household wages from any lockdown. The payments to households would continue as a vaccine for the deadly disease is rolled out across the country.

Independent shop closed until further notice in window due to the COVID 19 coronavirus pandemic, bars, cafes, restaurants, clubs all shut cause of this international crisis
Independent shop closed until further notice in window due to the COVID 19 coronavirus pandemic, bars, cafes, restaurants, clubs all shut cause of this international crisis

Explained Osterholm, “We could pay for a package right now to cover all of the wages, lost wages for individual workers, for losses to small companies, to medium-sized companies or city, state, county governments. We could do all of that. If we did that then we could lock down for 4 to 6 weeks.”

Investors haven’t taken Osterholm’s comments or the notion of a lockdown too well at all.

The Dow Jones Industrial Average plunged more than 300 points on Thursday, while the Nasdaq Composite and S&P 500 remained sharply lower. Investors booked post-election profits in cyclical and value stocks. In turn, they plowed back into stay-at-home stocks such as Zoom, Snap and Slack.

“The markets wouldn’t like that [the lockdown]. I don’t think the markets are pricing that in at all. This is not new from the Democratic side of the aisle,” added Nelson.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

What’s hot from Sozzi:

Watch Yahoo Finance’s live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, and reddit.