NEW YORK (Reuters) – U.S. stocks fell sharply on Wednesday as a surge in coronavirus cases in the United States re-ignited fears of a new round of government lockdowns, compounding worsening forecasts of the economic damage from the pandemic further.
The United States has recorded the second-largest rise in infections since the health crisis began, with states where restrictions meant to slow the spread of the disease were lifted early witnessing a flare-up in cases.
The governors of New York, New Jersey and Connecticut announced that visitors from states with high coronavirus infection rates must self-quarantine for 14 days on arrival.
“Markets have to start taking that seriously as it might impact the pace of the economic recovery and different states roll out plans,” said Art Hogan, chief market strategist at National Securities in New York.
“Today was finally the day markets came to terms with the fact that increasing COVID-19 cases could mean a slower recovery in the economy.”
Shares of U.S. airlines, resorts and cruise operators slumped. Royal Caribbean Cruises Ltd, Norwegian Cruise Line Holdings Ltd and Wynn Resorts all tumbled by at least 9% while the NYSE Arca Airline index plunged 7.04%.
The pandemic was causing wider and deeper damage to economic activity than first thought, the International Monetary Fund said, prompting it to slash 2020 global output forecasts further to 4.9% from 3.0%.
Advanced economies have been particularly hard hit, with U.S. output now expected to shrink 8.0%, more than 2 percentage points worse than the April forecast.
Wall Street’s fear gauge, the CBOE volatility index, rose to a one-week high at 37.12.
A slate of better-than-feared economic reports, easing lockdowns and massive stimulus measures have powered the Nasdaq to an all-time high and put the benchmark S&P 500 on track for its best quarterly performance since 1998.
The S&P 500 and Dow Jones Industrials are just about 10% and 14% from their respective February record closing highs.
The Dow Jones Industrial Average fell 761.2 points, or 2.91%, to 25,394.9, the S&P 500 lost 87.93 points, or 2.81%, to 3,043.36 and the Nasdaq Composite dropped 251.87 points, or 2.49%, to 9,879.50.
The biggest decliner among the 11 major S&P sub-sectors was energy, as crude prices slumped on a report showing another record storage level and the possibility of a drop in demand on a pandemic resurgence.
In addition to coronavirus concerns, Carnival Corp declined 10.90% as ratings agency Standard & Poor’s downgraded its bonds to junk status, forecasting continued weak demand for the cruise industry.
- Instant View: Wall Street backpedals amid new virus fears, quarantines
Dell Technologies Inc was a bright spot, as its shares jumped 7.61% after a report said the company was considering spinning off its roughly $50 billion stake in cloud computing software maker VMware Inc. VMware advanced 2.85%.
Declining issues outnumbered advancing ones on the NYSE by a 8.69-to-1 ratio; on Nasdaq, a 5.86-to-1 ratio favored decliners.
The S&P 500 posted one new 52-week highs and no new lows; the Nasdaq Composite recorded 39 new highs and 10 new lows.
Source: Read Full Article