S&P Closes lower as new COVID-19 Cases Surge
The S&P 500 closed lower on Wednesday as news of spiking pandemic data and the prospect of a new round of economic lockdowns dampened investor optimism over signs of economic recovery.
The S&P 500 and the Dow reversed earlier gains to snap a three-day winning streak. Tech shares led the Nasdaq to a modest gain.
Worries over a resurgence in the pandemic’s spread persisted, as new coronavirus cases hit a record in Oklahoma just days before President Donald Trump’s expected campaign rally in Tulsa.
The numbers of new cases are rising sharply in about six U.S. states, according to a Reuters analysis, and authorities in Beijing have ramped up mobility restrictions in their efforts to contain a new COVID-19 outbreak.
“There are periodic points of news flow where the positive news will carry the market and negative news will pressure the market,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “It’s a return of health concerns versus economic optimism.”
“There’s a tug of war with headlines,” Sroka added.
Indeed, the indexes were up earlier in the session on news than an inexpensive, common steroid called dexamethasone can help save critically ill COVID-19 patients, according to a clinical trial in Britain, a development that prompted the World Health Organization to update its treatment guidelines.
U.S. Federal Reserve Chair Jerome Powell wrapped up two days of congressional testimony, during which he pledged the central bank will use its “full range of tools” to help that recovery along. But Powell added, “It would be a concern if Congress were to pull back on the support that it’s providing, too quickly.”
On the economic front, while housing starts increased at a slower-than-expected pace in May, building permits saw a more robust rebound and applications for loans to purchase homes surged last week to a near 11-1/2-year high last week, according to separate reports from the U.S. Commerce Department and the Mortgage Bankers Association.
The Dow Jones Industrial Average fell 170.37 points, or 0.65%, to 26,119.61, the S&P 500 lost 11.25 points, or 0.36%, to 3,113.49 and the Nasdaq Composite added 14.67 points, or 0.15%, to 9,910.53.
Of the 11 major sectors in the S&P 500, eight ended the session in the red, with energy and financials suffering the largest percentage losses.
Oracle Corp dropped 5.6% after reporting weaker-than-expected quarterly revenues as lockdowns led its clients to delay purchases.
Cruise operator Norwegian Cruise Line Holdings Ltd extended the suspension of its voyages through September, sending its stock down 8.4%.
Peers Carnival Corp and Royal Caribbean Cruises Ltd dropped 6.5% and 7.2%, respectively.
Bankrupt car rental firm Hertz Global Holdings announced it would suspend its plan to sell $500 million in new shares after the U.S. Securities and Exchange Commission raised objections to the sale.
Declining issues outnumbered advancing ones on the NYSE by a 1.74-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored decliners.
The S&P 500 posted 10 new 52-week highs and no new lows; the Nasdaq Composite recorded 112 new highs and six new lows.
Volume on U.S. exchanges was 10.40 billion shares, compared with the 12.93 billion average over the last 20 trading days.