By Geoffrey Smith
Investing.com -- U.S. stock markets opened lower on Friday and were on course to end the week down, after a rise in new Covid-19 cases and a blast from the Federal Reserve reminded investors of the obstacles to a quick recovery.
The Fed had announced the results of its annual stress tests late on Thursday and had ordered banks not to buy back stock in the third quarter and capped their dividend payouts, aiming to ensure that they strong enough to absorb up to $700 billion in loan losses as a result of the pandemic.
As such, bank shares led the two old-economy indexes lower on Friday. Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) stock all fell by between 4% and 5%.
By 10 AM ET (1400 GMT), the Dow Jones Industrial Average was down 291 points, or 1.1% at 25,454 points. The S&P 500 was down 0.8% while the Nasdaq Composite – unburdened by large-cap banks – was also down 0.8%.
The day's biggest gainer was Gap (NYSE:GPS), which soared 33% after announcing a "multi-year" partnership with rapper Kanye West to sell a Yeezy line of clothing, offering items such as hoodies, basics, T-shirts and joggers The new line is expected to appear in Gap stores and on Gap.com in 2021, the two parties said. West will keep sole ownership of the Yeezy brand.
After losing over 80% of its value since the start of the U.S.-China trade war in 2018, Gap stock has now nearly doubled from its March low, on hopes that it may escape the general apocalypse engulfing Main Street retail.
Earlier, the market was left cold by numbers showing that personal spending rebounded by a record 8.2% in May - albeit that was short of expectations of a 9% increase after the equally-record-breaking 12% drop in April. The rise is unlikely to be sustained due to the continuing high level of unemployment: jobless claims only just dipped below 20 million two weeks ago, according to data released on Thursday by the Labor Department.
Elsewhere, Tesla (NASDAQ:TSLA) stock fell 0.4% amid reports that the company had terminated two employees for failing to return to work as its Fremont factory reopened, even though it had previously given them leave to remain at home. Tesla was reported as saying it couldn't contact the employees in question.
In other markets,Crude Oil futures and Gold Futures both drifted on profit-taking after big run ups in the last week as the week's news flow slowed to a trickle.