By Geoffrey Smith
Investing.com -- U.S. stock markets fell at the opening on Wednesday, as a rise in new coronavirus infections across most of the country revived the threat of restrictive measures to contain a disease that has never really gone away.
California, Texas and Florida - three of the four most populous and economically important states in the country -- have all reported record numbers of infections this week.
The mood wasn't helped by a reminder from the International Monetary Fund that the problem still exists far beyond the U.S.: the Fund slashed its outlook for the world economy this year to show a 4.9% contraction, rather than the 3.0% it had forecast in the immediate aftermath of lockdowns across China, Europe and the U.S.
By 9:35 AM ET (1335 GMT), the Dow Jones Industrial Average was down 288 points, or 1.1%, while the S&P 500 was down 0.8% and the Nasdaq Composite - home to the 'growth' stocks that have been investors' preferred sanctuary during bouts of market negativity this year, was clearly outperforming with a loss of only 0.3%.
However, that Nasdaq rally is looking suspiciously narrow to some. Liz Ann Sonders, chief investment strategist at Charles Schwab (NYSE:SCHW), highlighted via Twitter that the proportion of stocks in the Nasdaq trading above their 200-day moving averages is only 45%, compared to around 60% for the first half of the Trump presidency, and compared to around 80% during the earlier stages of the rally after 2009. That implies that traders are betting increasingly on a narrow selection of heavyweight stocks such as the FAANG megacaps and Microsoft (NASDAQ:MSFT), all of which posted all-time highs on Tuesday.
Apple (NASDAQ:AAPL), Microsoft and Netflix (NASDAQ:NFLX) all gave up between 0.5% and 1.0% in early trading, Apple being not unduly concerned by an Axios report that the Department of Justice is preparing to announce an antitrust investigation into possible abuse of the App Store (mirroring an EU investigation announced earlier this month). Facebook (NASDAQ:FB) stock was the biggest loser among the megacaps, losing 2.6% after Unilever (NYSE:UL) unit Ben & Jerry's joined a growing list of advertizers to boycott the group's two big social networks over its hands-off approach to inflammatory political opinion.
Cyclical stocks - notably cruise lines - were harder hit, with Carnival (NYSE:CCL) stock, Norwegian Cruise Line (NYSE:NCLH) stock and Royal Caribbean Cruises (NYSE:RCL) stock all falling over 9% on fears that a resurgence of the virus will push back even further the date when they can resume sailing.
The biggest gainers in early trading included Dell Technologies (NYSE:DELL) stock and VMware (NYSE:VMW) stock. after The Wall Street Journal reported that founder Michael Dell is considering another reshuffle of his portfolio. The options under consideration include a partial sale of Dell's 81% stake in VMWare, as well as a complete buyout, the WSJ reported.
Elsewhere, Crude Oil futures fell 2.2% to $39.76 a barrel amid renewed Covid-19-driven fears for the demand outlook, while Gold Futures recovered earlier losses to trade down 0.1% at $1,780 a troy ounce.