(Reuters) – Major Wall Street indexes fell on Friday when the United States set a new record for a one-day rise in coronavirus cases and bank stocks fell after the Federal Reserve decided to limit payments to shareholders.
FILE PHOTO: Flags hang on the exterior of the New York Stock Exchange when the building opens for the first time since March, while the outbreak of coronavirus disease (COVID-19) continues in the Manhattan district of New York , United States, May 26. 2020. REUTERS / Lucas Jackson
The S&P 500 .SPXBK sub-index of banks declined 5% after the Fed capped dividend payments and banned stock buybacks until at least the fourth quarter after its annual stress test.
In the previous session, bank stocks had boosted the top Wall Street indices, helping them offset investors’ fears of rising virus infections in several US states, including Texas, Oregon, and Utah. .
Cases increased in the United States by at least 39,818 on Thursday. Texas, which has been at the forefront of reducing restrictions, paused its reopening plans after the state recorded one of the biggest jumps in new infections.
“States are reconsidering the reopening and that will affect many companies,” said David Yepez, equity analyst and portfolio manager at Exencial Wealth Advisors in Oklahoma.
“We are not going to test those March lows, but there could be a correction, because we got a little too high.”
The surge in cases has also threatened to derail a sharp rebound for Wall Street that brought the S&P 500 to 10.7% of its all-time high in February thanks to record government stimulus measures.
The benchmark index was also testing its 200-day moving average, an indicator of long-term momentum. If it closes below the key level, it could indicate more losses.
At 11:02 am ET, the Dow Jones Industrial Average .DJI fell 532.55 points, or 2.07%, to 25,213.05, the S&P 500 .SPX fell 54.56 points, or 1.77%, to 3,029.20. The Nasdaq Composite .IXIC fell 194.40 points, or 1.94%, to 9,822.61.
Nike Inc (NKE.N) fell 5.8% as the published shoe maker reported a surprise quarterly loss hurt by store closings due to the pandemic.
Facebook Inc (FB.O) lost 6.4% after Verizon Communications Inc (VZ.N) joined a publicity boycott that called on the social media giant for not doing enough to stop hate speech on its platforms.
Gap Inc (GPS.N) increased 31.4% after signing a 10-year contract with rapper and fashion designer Kanye West to create a Yeezy clothing line.
The data showed that U.S. consumer spending rebounded in the largest amount on record in May, but earnings are unlikely to be sustainable as revenue declined and is expected to decline further as millions lose their unemployment checks starting next month.
Friday also marks the rebuilding of the FTSE Russell indices, including the large-cap Russell 1000 .RUI and the small-cap Russell 2000, which often marks one of the busiest trading days of the year.
The decrease in emissions exceeded that of the overtakers by a ratio of 6.40 to 1 on the NYSE and by a ratio of 5.92 to 1 on the Nasdaq.
The S&P Index recorded five new 52-week highs and no new lows, while the Nasdaq recorded 39 new highs and 13 new lows.
Reports from Devik Jain and Medha Singh in Bangalore; Editing by Arun Koyyur
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