Business InsiderTop News

Stocks – Dow Slumps Late as Tech Rally Cools on Concerns Over Rushed Reopening

imageStock Markets10 hours ago (May 12, 2020 04:13PM ET)

(C) Reuters.

By Yasin Ebrahim – Wall Street fell on Tuesday as optimism in tech stocks faded on rising worries that some states lifting restrictions too soon could spark a second wave of infections and inflict further economic damage.

The Dow Jones Industrial Average fell 1.89%, or 457 points, the S&P 500 slipped 2.05%, while the Nasdaq Composite dropped 2.06%.

Investor optimism over the reopening of the economy remained cautious as White House health advisor Dr. Anthony Fauci told Congress that the virus is not under control yet and raised concerns that some states are reopening businesses too soon, which may lead to further Covid-19 outbreaks.

The warning comes as data from the White House coronavirus task force showed a spike in new infections in the past week, NBC reported, citing leaked data.

Investor sentiment was also hit by renewed U.S.-China jitters after lawmakers introduced a bill that would grant the President Donald Trump permission to hit China with sanctions if the country does not cooperate with the investigation into the Covid-19 outbreak.

With concerns mounting over a second wave of coronavirus infections, investors seemingly reined in their bullish bets on technology, prompting FAANG to turn negative and end the day in the red.

Google-parent Alphabet (NASDAQ:GOOGL) fell 1.90% even as Citigroup upgraded its price on the tech giant to $1,600 from $1,400.

Healthcare, which had proved resilient in recent sessions on signs of progress on a potential coronavirus vaccine, was pressured by a fall in Gilead Sciences (NASDAQ:GILD) and Moderna (NASDAQ:MRNA), the front runners in the race to find Covid-19 treatments.

Financials, mostly banks, came under pressure as President Donald Trump exacerbated worries about a negative interest rate environment after calling on the Federal Reserve to deliver deeper interest rate cuts. Over the past few months, the Fed has cut rates to within a quarter-point of zero and policymakers stressed that negative interest rates were not a proven cure for economic crises.

Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) were down more than 3%.

Trump has been a vocal critic of Fed Chairman Jerome Powell and expressed frustrations that the central bank had upped rates too quickly and subsequently trimmed rates too slowly.

Investors will look to Powell’s virtual conference slated for Wednesday at 9:00 AM ET for clues on monetary policy. The Fed chief is expected to deliver an economic update, but may take the opportunity to push back against the idea of cutting rates below zero.

The call on the Fed to cut more comes as the central bank got its historic corporate bond-buying program underway — a move announced in March to avert a credit crisis.

On the economic front, investors continued to digest further evidence the U.S. economy is in crisis as core inflation, which excludes food and energy, recorded consecutive month-on-month declines for only the second time in the series’ 63-year history. The last time was 1982, ING said.

In deal news. meanwhile, Grubhub (NYSE:GRUB) surged 29% on reports that Uber Technologies (NYSE:UBER) had tabled an offer for the company, The company did not confirm talks, but said it was always looking at ways to increase shareholder value.

Stocks – Dow Slumps Late as Tech Rally Cools on Concerns Over Rushed Reopening

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Back to top button

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!