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Stocks slump as global coronavirus tally approaches 9M



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USA TODAY

U.S. stocks kicked the week off lower Monday as reports of new coronavirus infections worldwide surged.

The Dow Jones industrial average fell 150 points. The Standard & Poor’s 500 lost 0.5%, after the broad index notched its fourth weekly gain in the past five on Friday.

Shares of iPhone maker Apple and software giant Microsoft both ticked up about 1% apiece, while stocks tied to the economy reopening fell including airlines and casinos. Shares of American Airlines dropped 6.5% after the company said Sunday it was seeking $3.5 billion in new financing as it faces travel restrictions due to the pandemic.

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Financial markets around the world paused Monday as the global virus tally approached 9 million. Great uncertainty remains over whether countries that have been relaxing pandemic-fighting restrictions on travel and business might end up re-imposing broader controls that would slow a recovery from the worst global downturn since the Great Depression in the 1930s.

Even if widespread stay-at-home orders don’t happen, the fear is that scared shoppers may still shy away from stores and businesses may pull back on their own spending, analysts caution. 

“Public health leaders across the country are playing an extended game of Whack-a-Mole, where clusters of the virus will pop up. They do their jobs and control the spread, only to have new cases pop up elsewhere,” analysts at Raymond James said in a note. “While we haven’t seen a corresponding uptick in deaths, the next 10 days will tell us if one will occur.”

Stocks have been trading choppy in recent weeks on growing fears of a second wave of infections after rising more than 40% from March lows on hopes the worst of the pandemic was over. Investors have grown optimistic about a recovery following a massive stimulus package from Congress and unprecedented moves from the Federal Reserve to help support the economy.

Investors are hoping for another round of fiscal stimulus from Washington to help the economy through the reopening, but that is unlikely to happen before Congress goes on its July 4 recess.

Analysts at Goldman Sachs expect the potential risk of a second wave and the upcoming U.S. presidential election in November will limit a significant rise in stock exposure in the near term, they said. The bank projects that the S&P 500 index will trade in a range of 2,750 to 3,200 for the remainder of 2020, with a year-end target of 3,000.

“Periods of elevated policy uncertainty have generally coincided with lower-than-average equity allocations during the past 30 years,” analysts at Goldman Sachs said in a note.

The World Health Organization on Sunday reported the largest single-day increase in coronavirus cases by its count, at more than 183,000 new cases in the previous 24 hours. The UN health agency said on Sunday that Brazil led the way with 54,771 cases and the U.S. next at 36,617. India confirmed 15,400 new cases.

The United States also reported more than 30,000 new coronavirus cases on Friday and Saturday, with the daily totals their highest since May 1. A large share of the cases are in the South, West and Midwest, where hospitals in some areas are becoming overwhelmed.

Case numbers in South Korea and China have appeared to be moderating after recent outbreaks centered in their capitals.

The yield on the 10-year Treasury note was steady Monday at 0.70% after climbing as high as 0.74% on Friday. It tends to move with investors’ expectations for the economy and inflation.

A barrel of U.S. crude oil for delivery in July fell 0.7% to $39.48 per barrel in electronic trading on the New York Mercantile Exchange. It rose 2.3% to settle at $39.75 on Friday. Brent crude, the international standard, shed 0.3% to $42.08 per barrel.

Britain’s FTSE 100 lost 0.4% and the CAC 40 in Paris fell 0.7%. Germany’s DAX slid 0.7%. Tokyo’s Nikkei 225 index slipped 0.2%, while the Hang Seng in Hong Kong sank 0.5%. The Kospi in South Korea slipped 0.7%.

Contributing: The Associated Press

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