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Wall Street ends lower as coronavirus surge prompts renewed restrictions

Stock Markets Jun 26, 2020 06:35PM ET
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© Reuters. The spread of the coronavirus disease (COVID-19) in New York
 
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By April Joyner

NEW YORK (Reuters) - Wall Street's major indexes tumbled more than 2% on Friday as several U.S. states imposed business restrictions in response to a surge in coronavirus cases.

Some U.S. states that were spared the brunt of the initial coronavirus outbreak or moved early to lift restrictions are seeing a resurgence in new infections. On Friday, Texas and Florida ordered bars to close down again.

"You're seeing a pretty dramatic increase in cases," said Kevin Grogan, managing director of investment strategy at Buckingham Strategic Wealth in St. Louis. "If people start feeling again like it's not safe to eat out or go shopping, that could have a really negative impact on the stock market."

A Wall Street Journal report that the Phase 1 U.S.-China trade deal could be at risk placed additional pressure on U.S. stocks. According to that report, Chinese officials warned that "meddling" in Hong Kong and Taiwan could lead Beijing to back away from its commitment to purchase U.S. farm goods.

"It added another log into the risk aversion fire," said Edward Moya, senior market analyst at OANDA in New York, of the report on China.

Among sectors, financial, communication services and energy shares outpaced the broader S&P 500 in declines. S&P 500 bank shares plummeted 6.1% after the Federal Reserve limited dividend payments and barred share repurchases until at least the fourth quarter following its annual stress test.

Renewed concerns over the novel coronavirus pandemic have threatened to derail a strong rally for Wall Street that has erased much of the S&P 500's steep losses from March. The benchmark index ended below its 200-day moving average, an indicator of long-term momentum.

The uptick in coronavirus cases likely triggered a test of that technical level, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

The Dow Jones Industrial Average fell 730.05 points, or 2.84%, to 25,015.55, the S&P 500 lost 74.71 points, or 2.42%, to 3,009.05 and the Nasdaq Composite dropped 259.78 points, or 2.59%, to 9,757.22.

For the week, the S&P 500 fell 2.87%, the Dow lost 3.31%, and the Nasdaq shed 1.87%.

Facebook Inc (NASDAQ:FB) shares shed 8.3%, weighing the most on the S&P 500, after Unilever (NYSE:UL) PLC and Verizon Communications Inc (NYSE:VZ) joined an advertising boycott that called out the social media giant for not doing enough to stop hate speech on its platforms.

Nike Inc (NYSE:NKE) shares dropped 7.6% as the footwear maker, hurt by store closures due to the pandemic, posted a surprise quarterly loss.

Gap Inc (NYSE:GPS) shares surged 18.8% after the retail chain entered a 10-year deal with rapper and fashion designer Kanye West to create a line of clothing under his Yeezy brand.

Friday also marked the reconstitution of the FTSE Russell indexes, including the large-cap Russell 1000 and small-cap Russell 2000. Daily trading volume is often among its highest levels of the year during the reconstitution, though volume this year has spiked on several occasions amid steep market sell-offs.

Volume on U.S. exchanges was 16.43 billion shares, compared to the 13.44 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 3.99-to-1 ratio; on Nasdaq, a 3.57-to-1 ratio favored decliners.

The S&P 500 posted five new 52-week highs and no new lows; the Nasdaq Composite recorded 59 new highs and 28 new lows.

(This story refiles to fix grammar in paragraph seven)

Wall Street ends lower as coronavirus surge prompts renewed restrictions
 

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Comments (6)
Mostafa Amin
Mostafa Amin Jun 27, 2020 1:47AM ET
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Longe, Although, after the close, the Fed did order banks to limit dividend payouts for Q3 to no greater than the average quarterly profit for the most recent four quarters, and precluded them from share buybacks in Q3 as well.
Evgeny Zakharov
Evgeny Zakharov Jun 26, 2020 7:37PM ET
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So st*****d, you increase the amount of testing facilities, then you get the increase in numbers and make a decision to suffer. Where is common sense? That’s why I’m not getting this test, not to unnecessary increase those numbers
Ha Has
Ha Has Jun 26, 2020 7:33PM ET
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Thanks to the lamedemic.
Mehdi Mbv
Mehdi Mbv Jun 26, 2020 7:30PM ET
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Live free or die ....the economy is dying .....media creating panic ......
Buzzy Jefferson
Buzzy Jefferson Jun 26, 2020 9:00AM ET
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Nike lost my house. We easily spent $2K a year on their shoes and clothes.. Done!
Kilo Byte
Kilo Byte Jun 26, 2020 9:00AM ET
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You're just figuring out they're a leftist operative?
Buzzy Jefferson
Buzzy Jefferson Jun 26, 2020 9:00AM ET
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Kilo Byte   - No. It's been obvious since the '70s, but they're going too far over the line now for my taste.
Olivier Ve
lamborghinibull Jun 26, 2020 8:17AM ET
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surprise.. really?Nothing is surprised for the banks, all plandemic
 
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