Stocks plunge as virus cases rise, forcing states to back down

Shares on Wall Street fell sharply on Friday as new confirmed coronavirus infections in the US hit a record high, prompting Texas and Florida to reverse the course of business reopening.

The combination injected new concerns into a market that has been at its peak since April in hopes that the economy will recover from a deep recession as companies open doors and Americans begin to feel more confident that they can get out of business. homes again.

The S&P 500 fell 2.4%, giving up all of its gains after a rally the day before. The liquidation capped off a hectic week of trading that erased benchmark index earnings for the month. Still, the S&P 500 remains in pace for its best quarter since 1998.

The increase in the number of new confirmed cases of coronavirus incited Texas and Florida to reverse course and suppress bars again. The two states join a small but growing list of those who are regressing or putting on hold any reopening of their economies due to the resurgence of the virus.

“That certainly questions how vigorous this recovery will be,” said Bill Northey, senior investment director at US Bank Wealth Management. “We have to recognize that there is a high degree of uncertainty about how this will progress for the rest of the year.”

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The S&P 500 fell 74.71 points to 3,009.05. The Dow Jones Industrial Average had its worst day in two weeks, losing 730.05 points, or 2.8%, to 25,015.55. The Nasdaq, which hit a record high earlier this week, fell 259.78 points, or 2.6%, to 9,757.22.

Markets have been recovering mainly since April in the hope that US states and regions around the world may continue to lift established spring blocks to curb the spread of the coronavirus. The increase in cases casts doubt on expectations that the economy will continue to reopen and that things can return to normal sooner rather than later.

The number of confirmed new coronavirus cases per day in the US has reached a record high of 40,000, dwarfing the mark set during the deadliest stretch in late April. Deaths and hospitalizations have increased in some parts of the country, especially in the south and west.

The resurgence of the virus and the action of some governors to reverse or at least stop the reopening of their states undermines Wall Street’s optimism for relatively rapid economic change.

“That has real implications for the rate at which we can return to economic normality,” Northey said, adding that while some states are delaying its reopening, there is unlikely to be a widespread blockade at the national level.

The stock market is likely to remain volatile as traders weigh up the ups and downs in the pandemic’s trajectory.

“In large part, we will see some of these adjustments and beginnings,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “Sentiment is going to weigh to some degree, but overall we believe the economy is recovering and the recovery is on the way.”

Facebook fell 8.3% as an advertising boycott The objective of pressuring the social media giant to do more to prevent racist and violent information from being shared in its service is intensified. Verizon announced that it had joined the boycott on Thursday, and on Friday European consumer goods maker Unilever, which makes Ben & Jerry’s ice cream and Dove soap, also said it would stop advertising on Facebook.

Finance companies were among the biggest declines after the Federal Reserve ordered Many of the country’s largest banks suspend the buyback of their shares and limit the payment of dividends for several months.

Capital One Financial fell 8.8%, Goldman Sachs fell 8.6% and JPMorgan lost 5.5%. The announcement came as part of the Federal Reserve’s annual “stress tests,” which showed that in the worst case scenario that the pandemic ravaged the US economy, banks would collectively lose approximately $ 700 billion.

Traders also left shares in Nike after the sportswear maker reported a large loss since most of its stores were forced to close. The stock fell 7.6%.

Bond yields were mixed. The yield on the 10-year Treasury note fell to 0.65% from 0.67%, another sign of caution in the market. Yield tends to move with investor expectations for the economy and inflation.

Concern that a pullback in the reopening of companies could hamper energy demand helped lower oil prices on Friday. US benchmark crude for August delivery fell 23 cents to settle at $ 38.49 a barrel. Brent crude for August delivery fell 3 cents to $ 41.02 a barrel.

Major indices in Europe closed mostly lower, and Asian markets ended mostly higher.