Dow Jones down as consumer spending disappoints

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Weaker than expected economic data, record cases of coronaviruses and an unfavorable result for banks in Thursday’s Federal Reserve stress tests knocked the market down on Friday.
the
Dow Jones Industrial Average
534 points, or 2.1%, while the
S&P 500
lost 1.7%. the
Nasdaq composite
decreased by 1.7% and the
Russell 2000
down 1.8%.

The Fed has found that in a worst-case economic scenario, the loan losses of the 33 largest US banks could force them to draw on their capital reserves. This is too big a risk for the Fed.
Regulators will therefore cap the liquidity that banks can pay in dividends in the third quarter, in order to preserve capital. The Fed is also asking them to suspend share buybacks, although most have already done so themselves earlier this year. Bank stocks tumbled Friday after rising Thursday after the Federal Deposit Insurance Corporation announced that the Volcker rule would be relaxed after the 2008-2009 financial crisis to limit risk-taking by banks.

JPMorgan Chase
the security (ticker: JPM) decreased by 5.1%,
Goldman sachs
(GS) lost 7.5%,
Wells fargo
(WFC) fell 6.2% and
Bank of America
(BAC) fell 5.6%. The KBW Bank index was down 5.9%.
It was also a bad day for
Facebook
stock (FB). Shares were already down 4% on news that a growing group of companies would be taking their spending off the social media site, including
Verizon Communications
(VZ),
VF Corp.
(VFC) and in Patagonia. After the
Unilever
The group (UN) said that it would follow in the United States, Facebook’s stock fell further, with a loss of 7.5%.
Meanwhile, consumer spending in the United States rebounded 8.2% in May from expectations of an 8.7% rebound as businesses reopened following the closings.

Investors are also closely monitoring the escalation of coronavirus infections in the United States, with several states reporting daily registrations this week. The governor of Texas recalled the reopening of this state on Friday, in particular by closing bars and restricting the size of open-air gatherings.
“There is no doubt that the second wave of coronavirus was bleak and could keep this story going for some time, but the fact is that the smart money is considering the recent action by the governor of Texas to stop the efforts of additional reopening as a positive sign, “said Naeem Aslam, chief market analyst at AvaTrade, in a note to clients.
“For them, this is the step in the right direction to eliminate the current peak of Covid-19,” he said.
European markets reduced their previous gains on Friday. the
Stoxx Europe 600
the index is down 0.4%, the French CAC 40 down 0.2%, the
DAX
0.7% less, and the United Kingdom
FTSE 100
up 0.2%. Asian stocks finished mostly up, apart from 0.9% decline
Hang seng
index. In China, markets have been closed for the holidays.
Haven’s assets traded higher on Friday as stocks fell. Gold prices rose 0.5% to $ 1,779.10 an ounce after retreating this week from recent levels which were the highest since 2012. The yield on the US Treasury note at 10 years fell 3 basis points, or hundredths of a percentage point, to 0.640% as stock prices increased. The US dollar index (DXY), which measures the greenback against a basket of other currencies, was up 0.2%.
Oil prices also fell on Friday as West Texas Intermediate crude fell 1.4% to $ 38.19 a barrel and Brent crude 0.9% to $ 40.70.

Nike
(NKE) fell 6.3% after the sportswear maker posted a surprise loss as the pandemic hit sales harder than expected.

Virgin Galactic
(SPCE) increased 1% after its spacecraft completed its second successful hover over southern New Mexico.

You’re here
(TSLA) fell 1.8% as Deutsche Bank raised its target for the electric car company’s share price to $ 900, below its recent levels, close to $ 1,000 per share.

Amazon
(AMZN) has confirmed that it will purchase the autonomous car developer Zoox. This would pit Amazon against Waymo, which is supported by
Alphabet,
Parent company of Google. Amazon shares fell 0.2% on Friday.

Write to Barbara Kollmeyer at [email protected]

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