Stocks on Wall Street fell sharply Friday as confirmed new novel coronavirus infections in the U.S. hit an all-time high, prompting Texas and Florida to reverse course on the reopening of businesses.
The combination injected new jitters into a market that has been mostly riding high since April on hopes that the economy will recover from a deep recession as businesses open doors and Americans begin to feel more confident that they can leave their homes again.
The S&P 500 dropped 2.4%, giving up all of its gains after a rally the day before. The sell-off capped a choppy week of trading that erased the benchmark index's gains for the month. Even so, the S&P 500 is still on pace for its best quarter since 1998.
The surge in the number of confirmed new coronavirus cases prompted Texas and Florida to reverse course and clamp down on bars again. The two states join a small but growing list of those that are either backtracking or putting any further reopenings of their economies on hold because of a resurgence of the virus.
“That certainly calls into question how vigorous this recovery will be,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “We have to acknowledge there's a high degree of uncertainty about how this is going to progress for the balance of the year.”
Markets have been mostly rallying since April on hopes that U.S. states and regions around the world could continue to lift the spring lockdowns put in place to slow the spread of the coronavirus.
The increase in cases casts doubt on expectations that the economy will continue to reopen and things can get back to normal sooner rather than later.
The number of confirmed new coronavirus cases per day in the U.S. has hit an all-time high of 40,000, eclipsing the mark set during the deadliest stretch in late April. Deaths and hospitalizations have been rising in parts of the country, especially in the South and West.
The resurgence in the virus and the action by some governors to backtrack or at least pause the reopenings of their states undercut Wall Street's optimism for a relatively swift economic turnaround.
At a glance
• The S&P 500 fell 74.71 points, or 2.4%, to 3,009.05.
• The Dow Jones Industrial Average had its worst day in two weeks, losing 730.05 points, or 2.8%, to 25,015.55.
• The Nasdaq, which hit an all-time high earlier this week, dropped 259.78 points, or 2.6%, to 9,757.22.