U.S. Stocks Extend Drop as Infections Rise - The Wall Street Journal

rinwengi.blogspot.com

and

Updated June 26, 2020 12:46 pm ET

The S&P 500 dropped Friday and headed toward a weekly loss as daily coronavirus infections increased rapidly in some states, stoking worries about a slowdown in the economy’s reopening.

The broad stock-market gauge fell 2% in afternoon trading. The Dow Jones Industrial Average lost about 600 points, or 2.4%. The Nasdaq Composite fell 2%.

The S&P 500 and Dow were on track for weekly losses of at least 2%. The tech-heavy Nasdaq is down 1.3% for the week.

A number of states, including Arizona, Texas, South Carolina and Florida, saw confirmed cases rise by more than 30% over the past week, according to a Wall Street Journal analysis of data from Johns Hopkins University. Texas paused reopening plans Thursday, and some governors enacted sweeping new measures to help contain the outbreak.

Those concerns flared up Friday as the Texas governor issued an executive order limiting certain businesses to contain the spread of Covid-19.

A "walk-in" and "drive-through" coronavirus testing site in Miami Beach, Fla.
Photo: chandan khanna/Agence France-Presse/Getty Images

But other states, including New York, marched ahead with efforts to revive business and social activity as the infections ebbed.

“Right now, the market is sort of on hold,” said Rhys Herbert, senior economist at Lloyds Banking Group. Investors “are really looking for guidance on what’s the next stage: Will we see signs of recovery or is there a danger things slip again?”

Fresh figures showed U.S. consumer spending rose 8.2% in May after seeing a record drop in April, reflecting looser restrictions on businesses, federal stimulus and stepped-up unemployment payments.

“On the one hand, economic data gives us an indication of the pace of the rebound in the economy,” Mr. Herbert said. “On the other hand, there’s justified concerns of whether the disease is under control.”

Public-health officials said only about 1 in every 10 Covid-19 cases in the U.S. has been identified, and more Americans remain susceptible to the virus.

Still, some investors remained optimistic about the broader country’s reopening. Major indexes have rallied more than 35% from their March lows.

“It’s very fleeting,” said Anik Sen, global head of equities at PineBridge Investments, of the market’s reaction to new cases.

Shares of banks and financial companies were some of the worst performers after the Federal Reserve ordered banks to cap shareholder dividend payouts to preserve capital and barred share buybacks in the third quarter. Goldman Sachs Group fell 6.3%, while Wells Fargo retreated 5.6%.

Shares of Nike declined 5.6% after the athletic apparel company said sales fell 38% in the latest quarter, as mass closures of physical stores amid the pandemic overshadowed surging demand online.

U.S.-China tensions also show signs of percolating again after the Senate on Thursday passed a bipartisan bill that would put sanctions on Chinese officials who erode Hong Kong’s limited autonomy from Beijing, as well as the banks and firms that do business with them. Trump administration officials have expressed concern the legislation may hamper diplomatic negotiations between the two countries.

Major Asian equity benchmarks ended the day mixed. Hong Kong’s Hang Seng Index dropped 0.9%, while Japan’s Nikkei 225 gauge climbed 1.1% by the close of trading. Markets in China remained closed for a public holiday.

In bond markets, the yield on the 10-year U.S. Treasury edged down to 0.646%, from 0.674% Thursday.