The stock market plunged on Wednesday as Wall Street grew increasingly concerned about a spike in new coronavirus cases impeding an economic recovery.
The Dow Jones Industrial Average closed down 2.7%, over 700 points, on Wednesday, while the S&P 500 fell 2.6% and the tech-heavy Nasdaq Composite lost 2.2%.
Stocks accelerated their losses after the open, taking a hit from growing fears of a resurgence in coronavirus infections across the country as states lift lockdown orders.
New cases in the U.S. on Tuesday hit the highest level since April, with the nation’s three most populated states—Texas, Florida and California—all reporting a record high number of new cases.
New York, New Jersey and Connecticut announced on Wednesday that they will require visitors from Florida, Texas and other states with a spike in new cases to quarantine for 14 days on arrival.
White House health advisor Dr. Anthony Fauci warned that many states are beginning to see a “disturbing surge” in new coronavirus cases, though he remained upbeat about a potential vaccine arriving by early 2021.
Shares of companies that would benefit from the economy reopening—including retailers, airlines and cruise operators—plunged across the board on Wednesday.
Royal Caribbean Cruises and Norwegian Cruise Line stock plunged over 10% following a downgrade from Barclays analysts, who warned that both companies face a “murky path” to returning to full operations.
Shares of Dell Technologies jumped over 8% after the Wall Street Journal reported late on Tuesday that the company is exploring options—including a possible spinoff or sale—for its $50 billion stake in cloud computing company VMWare.
“Just like on June 11, the market has again gotten caught up in the crossfire of increasing numbers of Covid-19 cases, trade protectionism and politics,” says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “The market has been optimistic that the economy is re-opening and that life would get somewhat back to normal, but the virus may have other ideas.”
Despite recent market volatility, the Nasdaq posted its eighth straight day of gains on Tuesday, hitting a new intraday record high for the first time since June 10. The index was boosted by several big tech stocks—including Apple, Amazon and Netflix—hitting new all-time highs. The Dow and S&P both finished slightly higher, recovering from earlier losses when White House trade advisor Peter Navarro walked back his statement that the China trade deal is “over,” insisting that his comments were “taken wildly out of context” and that the Phase 1 trade deal “continues in place.”
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