Wall Street tumbles on rising virus cases, grim economic forecast


U.S. stocks fell sharply on Wednesday as a surge in coronavirus cases in the United States fanned fears of a fresh lockdown, with worsening forecasts of the economic damage from the pandemic further denting sentiment.

Traders exit the 11 Wall St. door of the NYSE in New York

FILE PHOTO: Traders exit the 11 Wall St. door of the New York Stock Exchange (NYSE) in New York City, New York, U.S., June 11, 2020. REUTERS/Brendan McDermid

REUTERS: U.S. stocks fell sharply on Wednesday as a surge in coronavirus cases in the United States fanned fears of a fresh lockdown, with worsening forecasts of the economic damage from the pandemic further denting sentiment.

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.

Shares of U.S. airlines, resorts and cruise operators slumped and the S&P 1500 airlines index fell 7.3per cent. Royal Caribbean Cruises Ltd , Norwegian Cruise Line Holdings Ltd and Wynn Resorts shed between 9per cent to 12per cent.

“There is a sudden perception change among investors related to the extent of new round of virus cases,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

“The greatest focus is on COVID-19 (news) more than anything else until we get a more granular look at to what’s going on.”

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 4.9per cent from 3.0per cent.

Advanced economies have been particularly hard hit, with U.S. output now expected to shrink 8.0per cent, 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 35.86.

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 1975.

The S&P 500 and Dow Jones Industrials are just about 10per cent and 13.7per cent from their respective February record closing highs.

At 12:52 p.m. ET, the Dow Jones Industrial Average was down 656.54 points, or 2.51per cent, at 25,499.56, the S&P 500 was down 75.81 points, or 2.42per cent, at 3,055.48. The Nasdaq Composite was down 208.52 points, or 2.06per cent, at 9,922.85.

The biggest decliner among the 11 major S&P sub-sectors was energy , which tracked a steep fall in oil prices.

Carnival Corp declined 10per cent as ratings agency Standard & Poor’s downgraded its bonds to junk status, forecasting continued weak demand for the cruise industry.

On the other hand, Dell Technologies Inc jumped 11per cent after a report said the company was considering spinning off its roughly US$50 billion stake in cloud computing software maker VMware Inc . VMware advanced 2.7per cent.

Declining issues outnumbered advancers more than 9-to-1 on the NYSE and 6-to-1 on the Nasdaq.

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded 36 new highs and nine new lows.

(Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Arun Koyyur)



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