Wall St Tumbles As Lockdown Restrictions Return

By Glenn Dyer | More Articles by Glenn Dyer

US stocks closed sharply lower after Texas and Florida rolled back business reopening measures, raising fresh fears that a new coronavirus outbreak in the US would derail the stuttering economic recovery.

The S&P 500 fell 2.4% while the Dow Jones Industrial Average lost 2.8% and the Nasdaq shed also slid 2.4% on Friday.

The sell-off accelerated steam after Texas announced it was shutting bars and curtailing public gatherings in the face of new record increase in coronavirus cases.

Florida posted its biggest jump in new cases, with nearly 9,000 infections recorded over the last 24 hours — or nearly double the 5,000 cases reported on Thursday.

A rise in hospitalisations and deaths in states in the southern and western states of the US quickened as the week went on and now threatens to stall, plans to reopen economies nearly frozen for months to limit the spread of the deadly virus.

Coronavirus cases are increasing among people between the ages of 22 and 44, notably in Arizona, Florida and Texas.

This week investors will be eyeing some major bits of data to judge how the recovery is going.

US data this week includes reports on employment, consumer confidence, manufacturing and car sales for clues on whether the weak rebound remains intact.

Confidence in US travel stocks (such as airlines, cruise companies and airports) will take a whacking tonight after the European Union said it will bar most travellers from the United States, Russia, and dozens of other countries considered too risky because they have not controlled the coronavirus outbreak,

By contrast, travellers from more than a dozen countries (including Australia) that are not overwhelmed by the coronavirus will be welcomed when the bloc reopens after months of lockdown on Wednesday (July 1).

China is among the acceptable countries — but only if China allows European Union travellers to visit as well.

The Dow 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 Nasdaq slid 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%.

S&P 500 banks lost 6.1% after the Federal Reserve limited dividend payments and barred share repurchases until at least the fourth quarter following its annual stress test.

Goldman Sachs shares fell 8.6%, JPMorgan shares lost 5.5%, Bank of America lost 6.3%, Wells Fargo slumped 7.4%, Citi shares shed 5.8% and Morgan Stanley did better with a loss of ‘only’ 3.5%.

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

Facebook later announced that it will start labelling newsworthy content that violates the social media company’s policies, and label all posts and ads about voting with links to authoritative information, including those from politicians.

Facebook has drawn heat from employees and politicians and others in recent weeks over its decisions not to act on inflammatory posts by President Trump.

A spokesperson for the company said the new policy would have seen one of Donald Trump’s more contentious posts on mail-in voting labelled and linked to information sources.

Nike shares dropped 7.6% as the footwear maker, hurt by store closures due to the pandemic, posted a surprise quarterly loss. It saids on Friday it will retrench staff as it pushes deeper into digital marketing and sales.

Microsoft Corp said on Friday it would close its 83 retail stores around the world and take a related pretax asset impairment charge of $450 million in the current quarter. The store in Sydney – which is one of a hand full of technology display outlets – will remain open.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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