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S&P 500 tumbles on fears of virus resurgence in economic reopening

Stock MarketsMay 12, 2020 04:45PM ET
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© Reuters. The spread of the coronavirus disease (COVID-19) in New York

By Sinéad Carew

New York (Reuters) - The S&P 500 dropped 2% on Tuesday as investors took profits following a warning from the top U.S. infectious disease expert that premature moves to reopen the nation's economy could lead to novel coronavirus outbreaks and set back economic recovery.

The index suffered its first decline in four sessions as investors weighed the potential for a second wave of virus infections against hopes that easing of stay-at-home restrictions could ignite a recovery in the U.S. economy, which has been severely damaged by the virus.

Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, told Congress that the virus, which has already killed 80,000 Americans, was not yet under control and that there would not likely be a treatment or vaccine in place by late August or early September.

"There is a real risk that you will trigger an outbreak that you may not be able to control and ... could even set you back on the road to try to get economic recovery," Fauci said of premature steps.

And reports of new clusters of coronavirus infections in countries such as China, South Korea and Germany where lockdowns had been lifted appear to have added to worries.

Optimism about an economic recovery and massive stimulus measures have helped the S&P 500 climb about 34% to Tuesday's intraday high from the March 23 low of the pandemic-driven selloff.

"It goes back to science versus the Federal Reserve. The Federal Reserve has been supportive of the market ... What's going to win here?," said Phil Blancato, chief executive of Ladenburg Thalmann Asset Management in New York.

"From the science viewpoint if we open too quickly, we'll just go back to where we were. But if we don't open at all, we have this economic malaise."

With concerns about potential for declines, participants like Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas, were anxious to lock in their profits.

"People are very nervous about how the reopening is going to go," he said.

Wall Street's three major averages closed around their session lows. The Dow Jones Industrial Average fell 457.21 points, or 1.89%, to 23,764.78, the S&P 500 lost 60.2 points, or 2.05%, to 2,870.12 and the Nasdaq Composite dropped 189.79 points, or 2.06%, to 9,002.55.

The Cboe Volatility Index, known as Wall Street's fear gauge, ended 5.47 points higher at 33.04. It was the biggest one-day point gain for the VIX in more than three weeks.

Among the S&P's 11 major sectors, real estate was the biggest percentage decliner with a 4.3% drop.

Industrials and financials were the next biggest laggards with respective declines of 2.8% and 2.7%.

Tuesday's data showed that U.S. consumer prices dropped by the most since the Great Recession in April, due to a plunge in demand for gasoline and services including airline travel as people stayed home during the coronavirus crisis.

But prices for food consumed at home rose 2.6% in the largest advance since February 1974, leaving some investors anxious about the prospect of stagflation, if consumers cannot keep up with price increases for essentials.

"What happens if the cost of essential goods get more expensive and you're not earning enough money. That could become really problematic," said Ladenburg Thalmann's Blancato.

Helping to drag down the financial sector was a 7.8% drop in BlackRock Inc (NYSE:BLK), after its top shareholder PNC Financial Services Group Inc (NYSE:PNC) said it planned to sell its entire 22% stake in the world's largest asset manager.

Online food delivery company GrubHub (NYSE:GRUB) Inc surged 29% after a person familiar with the matter said Uber Technologies (NYSE:UBER) Inc was in advanced talks to buy the company in an all-stock deal.

Declining issues outnumbered advancing ones on the NYSE by a 2.91-to-1 ratio; on Nasdaq, a 2.65-to-1 ratio favored decliners.

The S&P 500 posted nine new 52-week highs and two new lows; the Nasdaq Composite recorded 91 new highs and 42 new lows.

On U.S. exchanges 11.28 billion shares changed hands compared with the 11.36 billion average for the last 20 sessions.

S&P 500 tumbles on fears of virus resurgence in economic reopening
 

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Comments (21)
Zach Lohman
Zach Lohman May 12, 2020 5:13PM ET
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Wall St tumbles becuase it was up for the last couple days and becuase it’s a market. I somehow doubt Covid is responcible for everything.
Fei Yau Lim
Fei Yau Lim May 12, 2020 5:08PM ET
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News must have something to write about regardless whether it goes up or down and there always will be a reason for it.
Proble Matic
Proble Matic May 12, 2020 4:58PM ET
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Here we go. All the fakers are coming out to tell the world all is good don't worry about the pandemic and that existence and reality are not a real thing that we live in a matrix and that it's only the Democrats causing hype to make Trump lose the election. Hahahaha
Sonia Noh
Sonia Noh May 12, 2020 4:27PM ET
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so market didnt fear till this week about the virus resurgence huh? with thousand dying daily only in the us? u guys r playing as excuse for this roller coaster
steven gitt
steven gitt May 12, 2020 3:58PM ET
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title correct: Stock markets shows change in price from day before
steven gitt
steven gitt May 12, 2020 3:58PM ET
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*correction
Michael Eymer
Michael Eymer May 12, 2020 3:03PM ET
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This just in: Socks roar on hopes of reopening! Breaking news: Stocks slip on fears of reopen risks 🤪
Hakan Korkmaz
Hakan Korkmaz May 12, 2020 3:03PM ET
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They are just talking to find a header aligned with that moment. There is no corelation about the real economy and stock market yet. If the earning for companies continues to decrease, there is no way that could not effect the stock market. Eventually stock market will get a hit from this bad results.
steven gitt
steven gitt May 12, 2020 1:26PM ET
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the censorship brigade is working overtime deleting comments on this site
Elvis Durant
Elvis Durant May 12, 2020 1:23PM ET
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Reuters and Investing Been using same wording past 3 weeks. Seems like their dicitionary ran out of words
steven gitt
steven gitt May 12, 2020 1:23PM ET
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careful this site busy censoring people who speak negative of the globalist propaganda machine
Adrian White
Adrian White May 12, 2020 1:23PM ET
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They are not censoring with a political bias. Plenty of my comments have been censored too. I wish they would at least publish what guidelines they use to censor though.
steven gitt
steven gitt May 12, 2020 1:23PM ET
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Adrian White they absolutely are censoring with political bias
steven gitt
steven gitt May 12, 2020 1:23PM ET
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Adrian White there are some words that are universally banned such as curse words. but the list of political words that are censored, and the posts that go for moderation that are not approved show strong political bias.
steven gitt
steven gitt May 12, 2020 1:23PM ET
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Adrian White that is based on my experience, and i have been keeping a list of posts that have been censored. i have also been keeping various examples of posts that are anti-trump anti-republican that have been permitted, but similar posts that are pro-trump anti-democrat that have been censored.
Amy Awin
Amy Awin May 12, 2020 1:18PM ET
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go die usd
George Jetson
George Jetson May 12, 2020 1:16PM ET
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wait...there is a risk of things happening when the economy opens back up? No way! DUIs are up.. it's the end of the world!
Chris Mallory
Chris Mallory May 12, 2020 1:14PM ET
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Economy opening would seem like a positive thing. Democrat media must be working OT
Matthew Carter
Matthew Carter May 12, 2020 1:05PM ET
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Oh yes the lovely Dr Fauci....wish the media would expose this turds skeletons oh but then again there probably in cahoots with one another considering all their ties with Big Pharma. SOBs!!!
Matthew Carter
Matthew Carter May 12, 2020 1:05PM ET
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Top disease specialist??? only one way to the top and that's by stomping over everyone in front of you, no matter what kind of back stabbing, lying, ***kissing, etc. it takes.
Tricky Dick
TrickyDick May 12, 2020 12:57PM ET
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Thumbs up if you think Investing.com should can it's articles.
CT SomyedHengSuay
CT SomyedHengSuay May 12, 2020 12:50PM ET
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" Optimism about an economic recovery and massive stimulus measures " = I feel laughing every time I see this saying like this.
HJ Index
HJ Index May 12, 2020 12:34PM ET
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well, they just need wave C to buy more cheap stocks.
Thom Miller
Thom Miller May 12, 2020 11:54AM ET
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Psst....Hey TrickyDick....If you rely on this amateur site for anything but reading the markets, you’re being taken to the cleaners. This site is nothing but an offshore shell game based in Bibi’s Israel. Based on your comnents, you’ve been sucked in here in the same way your namesake was sucked into Watergate. But not to worry, there’s one of your kind born every 50 years or so: Sucker!
color trailer
color trailer May 12, 2020 11:50AM ET
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full margin Tesla 50k $
Tricky Dick
TrickyDick May 12, 2020 11:45AM ET
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This site might be better if they just got rid of all the "professional" commentary. Just publish the data and allow users to comment. Please dump all the shills.
Tricky Dick
TrickyDick May 12, 2020 11:42AM ET
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Absolutely hilarious, "Wall Street dips on risks linked to reopening of economy" Wasn't it just 2 days ago "Wall Street surges on hopes linked to reopening of economy"
Noel Amparo
Noel Amparo May 12, 2020 11:42AM ET
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I agree with you it's so funny... I like reading the headlines and comments
Samson Chu
Samson Chu May 12, 2020 11:42AM ET
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Don't blame them. They ran out of ideas on what to write everyday.
Michael Eymer
Michael Eymer May 12, 2020 9:07AM ET
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“Futures edge higher as retail buys up dip left by hedge funds disbusing their risk” -ftfy
Zhikang Sim
Zhikang Sim May 12, 2020 9:03AM ET
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up hopes of economic ,down fears second wave virus .same topic lol
 
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