Dow slips 600 points after reopening Texas in the middle of a spike in coronavirus cases

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Inventories fell Friday amid concerns over the growing number of coronavirus cases in the United States and its impact on the economic recovery.The Dow Jones Industrial Average fell 600 points, or 2.4%, while the S&P 500 and Nasdaq Composite fell 2% and 1.9% respectively. These losses pushed the main averages down at least 1.3% each for the week.

Texas Governor Greg Abbott said on Friday that the state would cancel some of its reopening measures as coronavirus cases and hospitalizations continued to increase. “At the moment, it is clear that the increase in the number of cases is largely due to certain types of activity, including Texans who gather in bars,” Abbott said in a statement.

Florida has announced that it will “stop drinking locally” at state bars. In Arizona, the number of cases jumped 5.4%, exceeding a 7-day average of 2.9%.

“Coronavirus cases are on the rise and reopenings are delayed, which will at least have an impact on revenue,” said Tom Essaye, founder of The Sevens Report. “The resurgence of coronavirus cases raises fears that the rebound will be short-lived as voluntary or potentially more government-imposed economic closings are becoming more and more likely. ”

The shares of companies that would benefit from an economic reopening fell. United Airlines, American and Delta all slid more than 4%. The cruise ship Norwegian Cruise line lost about 4%.

These actions were taken after the Fed’s annual stress test on the major banks showed that some banks could approach minimum capital levels in scenarios related to the coronavirus pandemic. For this reason, banks must suspend share buyback programs and cap dividend payments at current levels for the third quarter. Wells Fargo and Capital One may be forced to cut their dividends.

“While I expect banks to continue to manage their equity and liquidity risk prudently and in support of the real economy, there is significant uncertainty about the path of economic recovery “Fed Vice President Randall Quarles said in a statement.The announcement brought down a few bank stocks on Friday. Bank of America and JPMorgan Chase both declined by more than 3%. Wells Fargo was down 4% and Goldman Sachs lost 4.75%. Bank stocks have seen sharp increases, rising more than 3% in regular exchanges Thursday.

Meanwhile, Nike stocks slipped 3.6% following a surprising quarterly loss for the clothing giant. The company reported a loss of 51 cents per share and revenue of $ 6.31 billion for its fourth fiscal quarter. Nike’s quarterly sales are down 38% year over year.

Friday’s losses came despite a record increase in consumer spending in May. The Commerce Department announced on Friday that spending had increased 8.2% last month, a positive sign for the US economy amid an increasing number of negative headlines about coronaviruses.

The government report on the amount Americans spent on goods and services in May was the largest month-to-month increase from 1959. Consumer spending represents more than two-thirds of economic demand for United States.

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