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Wall Street tumbles on rising virus cases, grim economic forecast

Stock MarketsJun 24, 2020 01:10PM ET
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© Reuters. Traders exit the 11 Wall St. door of the NYSE in New York

By Medha Singh and Devik Jain

(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 7.3%. Royal Caribbean Cruises Ltd (N:RCL), Norwegian Cruise Line Holdings Ltd (N:NCLH) and Wynn Resorts (O:WYNN) shed between 9% to 12%.

"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 4.9% 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 (VIX), 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 (DJI) are just about 10% and 13.7% from their respective February record closing highs.

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

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

Carnival Corp (N:CCL) declined 10% 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 (N:DELL) jumped 11% after a report said the company was considering spinning off its roughly $50 billion stake in cloud computing software maker VMware Inc (N:VMW). VMware advanced 2.7%.

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.

Wall Street tumbles on rising virus cases, grim economic forecast
 

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Comments (49)
Hong Ee Leow
Hong Ee Leow Jun 25, 2020 1:27PM ET
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The market is most likely doing a bearish correction right now similar to the 2008-2009 global financial crisis so the dark days may still be upon us as the previous few weeks of bullish market did not last long. However, there is hopes that once the pandemic stabilises with no subsequent waves, markets will begin its full recovery
Vv Pp
Vv Pp Jun 25, 2020 6:08AM ET
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this lunatic made USA a 3rd world country in virus death rate and still some are afraid of their 2 shares in Apple. Keep chasing communists, blacks and socialist media. For now, Americans are banned from Europe, what a shame!! Wear masks and stay home, it's so simple
Harrison Sussman
Harrison Sussman Jun 25, 2020 5:42AM ET
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You guys tend to post bearish articles more often than bullish articles and I'm not sure why all the doom and gloom. Also, the timing tends to be such that it comically and consistently coincides with a move in the bullish direction shortly thereafter. I'm just wondering if we can see some more positivity during times when people need it the most.
Musical Critic
Musical Critic Jun 24, 2020 8:49PM ET
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I told you, the smart fed always negates its fall with a green the next day. But when it will come for real, the fed will wet its you know what!
Brady Murray
Brady Murray Jun 24, 2020 8:05PM ET
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Needed a pullback. Now let's not forget Communist China is responsible for this mess. The regime and silencer of the people needs to pay. The thief and liar and intellectual property thief needs a good ole fashioned reckoning. Glad to hear thousand of US companies will be leaving.
BK Chopra
BK Chopra Jun 24, 2020 6:44PM ET
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buy on dips..
hemal Ajmera
hemal Ajmera Jun 24, 2020 6:44PM ET
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perfect 👍
Big Guy
Big Guy Jun 24, 2020 6:11PM ET
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Real report for Orange County California.. People are OVER it. NOBODY gives a fug. We will never close again. The people know it's a hoax. The numbers are a lie. The hospitals are giving out covid diagnoses so they can receive that sweet Cares cash.
Asher Manangan
Asher Manangan Jun 24, 2020 5:40PM ET
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People! Just wear a mask!
New Jazenevd
New Jazenevd Jun 24, 2020 5:35PM ET
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It was a buying opportunity today. Talk about new lockdowns is excessive, just to say the least.
Francesco Lucchesi
Francesco Lucchesi Jun 24, 2020 3:08PM ET
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so where is Powell announcing more printing ? strange he didn't make an appearance today, very likely tomorrow
 
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