The Dow Jones Industrial Average dropped more than 700 points on Monday.
Here's what four experts are watching now.
"I've been telling people, 'Please don't jump the gun on infrastructure.' Stick with the themes that are working, stick with the idea that travel is getting better, stick with the idea ... housing remains strong given how low rates are. ... There will be people that say this new wave of Covid just makes it even more likely that people are not going to go to the office, and I think that that does create gloom. The gloom is pretty palpable, I think, because of Covid."
David Rosenberg, founder of Rosenberg Research, said hopes of a Democratic sweep may be receding.
"Let's start with the stimulus, because in the past month we've had eight different sessions where the Dow moved 300 points or more and on what? Well, stimulus talks, and so it looks as though we're not going to be getting the stimulus, at least not that quickly in terms of what was being priced into the market. ... I think that what got the market really excited the past couple of weeks was the sense we're going to get a blue wave and with the blue wave was going to come $3.5 trillion dollars of stimulus, and of course we all know what that means for the stock market. But you know the polls now, even though they're showing that Joe Biden is going to take the White House, the polls are also showing that the GOP still has a slight edge in the Senate, so this view that there's going to be a clean sweep, it's not that evident."
Barry Bannister, head of institutional equity strategy at Stifel, said the latest developments in the markets have not come as a surprise.
"A lot of the things that we were concerned about do seem to be happening now. We've been expecting a fourth-quarter sort of second-act correction of about 10% to the low 3,000s for the S&P 500, treading water really since the summer. You've got the election, the outlook for fiscal policy, a stronger dollar and lower inflation is more likely and lower oil prices. I'm concerned about 2021 earnings growth. And the virus, of course, has sparked a seasonal reprisal which we expected. We thought it would come back in the upper Northern states sometime in the late fall, early winter just like it spiked in the South in the late spring, early summer.
Mohamed El-Erian, Allianz chief economic advisor, breaks down what additional fiscal or monetary stimulus might come.
"So far markets have been completely insulated because of monetary policy, and there was a hope in the marketplace that fiscal would come in and then would flood the system with both monetary and fiscal and simply would overwhelm these negative fundamentals. Now we've learned a few things — that on the fiscal side it's harder, it's politically harder. And you know what, even if we get it, it doesn't go to financial assets like monetary policy does. It goes into income support, which is good for people, but less good for markets directly. I think the bottom line is it all comes down once again to the liquidity conditioning. Will markets believe that central banks can simply decouple valuations from fundamentals for another round? It's all about conditioning. It's all about behavioral finance right now."