By Julia Horowitz, CNN Business

(CNN) -- Stocks are selling off sharply on fears that Covid-19 infections are spiraling out of control again and government leaders could have no choice but to enact another wave of lockdowns.

What's happening: US futures point to steep declines at the open on Wednesday, with Dow futures off 1.7%, or more than 450 points. European stocks plunged to their lowest level in five months. Germany's DAX dropped 2.8%, while France's CAC 40 shed 2.5% and the FTSE 100 in London lost 1.5%.

"The financial markets are still nervous about rising case numbers and the pandemic," said Paul Donovan, chief economist at UBS Global Wealth Management. "The concern is about the impact this may have on fear levels — either amongst consumers or amongst policymakers."

Right now, Donovan said, policymakers seem more worried than the general public. That may mean that in the United States, where restrictions have been more limited, the economic damage will be less severe — one reason US stocks haven't been selling off as sharply as those across the Atlantic.

Driving the news: French President Emmanuel Macron will announce new measures on Wednesday to fight the coronavirus, while German Chancellor Angela Merkel is set to discuss further steps to contain the virus in a meeting with the leaders of the country's 16 states.

Analysts are quick to note that the situation looks very different than it did nearly eight months ago, when markets entered a tailspin.

"Unlike in March we ... know quite a lot about what Covid-19 means for market plumbing," Nomura currency analyst Jordan Rochester told clients Wednesday.

He noted that the Federal Reserve has the framework in place to ensure ready access to US dollars, and that bond purchases are "ticking along and can be ramped up at the whim of central bankers."

He has a point: The European Central Bank, which is due to announce its latest policy decision on Thursday, is expected to indicate that it will enact fresh measures before the end of the year, though the details remain hazy.

"We expect the Governing Council to signal rising urgency to act — noting that it stands ready to provide additional easing if the recovery slows sufficiently," Goldman Sachs economists said in a recent research note.

But any indication that policymakers believe they've provided enough support would "severely change the dynamics for risk sentiment," Rochester warned.

Microsoft is still cashing in on home life

Months into the Covid-19 crisis, Microsoft's business is still booming as people spend more time at home.

The latest: The company on Tuesday reported more than $37 billion in revenue for the three months ending in September, well above Wall Street's predictions, my CNN Business colleagues Shannon Liao and Clare Duffy report.

Revenue from Azure, its cloud computing division, jumped 48% year-over-year. Personal computing revenue was up 6% thanks to a boost from Xbox and Microsoft Surface sales.

Microsoft CEO Satya Nadella said that the company has benefited from accelerated adoption of digital capabilities such as cloud computing and Teams, its workplace collaboration offering.

Teams now has more than 115 million daily active users, up from 75 million in April.

"The next decade of economic performance for every business will be defined by the speed of their digital transformation," Nadella said on a call with analysts.

The results bode well for other top tech companies including Amazon, Facebook and Google parent Alphabet, which are due to report results Thursday. Like Microsoft, they've been lifted by changes in behavior, which have ramped up demand for online services.

Investor insight: The big question now is whether Microsoft can keep hitting its ambitious growth targets without burning lots of cash. Shares are down 1.5% in premarket trading.

"While revenues are exploding, we note that the buildout for cloud services is getting increasingly expensive," Bespoke Investment Group said in a note to clients.

Not just Tesla: Shares in these US carmakers are surging

The rally in Tesla shares — which are up more than 150% since the beginning of June — puts most other stock increases to shame.

But GM, Ford and Fiat Chrysler are performing well, too. All have jumped more than 30% in the same period, my CNN Business colleague Chris Isidore reports. That's nothing to sneeze at.

What's happening: Earlier this year, when auto plants and many dealerships were closed by Covid-related shutdown orders, there was a great deal of uncertainty about how automakers would weather the storm. But car sales rebounded strongly in the third quarter, as concerns about taking public transit to work helped generate demand.

Investors also hope traditional carmakers will get a boost from growing interest in electric vehicles, which are cheaper to build and could improve profit margins. According to analysts, GM — which recently announced a $2 billion investment to build electric cars in Tennessee — is at the front of the pack.

Watch this space: The big three American automakers all lost money in the second quarter. But a return to profitability is expected when these companies report third-quarter results. Ford and Fiat Chrysler report Wednesday, while GM reports next week.

Up next

Boeing, Dine Brands, GE, Mastercard, Fiat Chrysler and UPS report results before US markets open. Etsy, Ford, Gilead Sciences, Pinterest and Visa follow after the close.

Coming tomorrow: The first look at US GDP for the third quarter is expected to reveal an economy that was growing at a record speed.