Wall Street tumbles on rising virus cases, grim economic forecast

By Medha Singh and Devik Jain (Reuters) - U.S.

Reuters June 25, 2020 00:08:49 IST
Wall Street tumbles on rising virus cases, grim economic forecast

Wall Street tumbles on rising virus cases grim economic forecast

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, Norwegian Cruise Line Holdings Ltd and Wynn Resorts 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, 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 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 was down 656.54 points, or 2.51%, at 25,499.56, the S&P 500 was down 75.81 points, or 2.42%, at 3,055.48. The Nasdaq Composite 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, which tracked a steep fall in oil prices. [O/R][O/R]

Carnival Corp 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 jumped 11% after a report said the company was considering spinning off its roughly $50 billion stake in cloud computing software maker VMware Inc. 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.

(Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Arun Koyyur)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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