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U.S. Stocks See Further Downside Amid Concerns About Spiking Coronavirus Cases

wallstreet aug22 24jun20 lt

After coming under pressure early in the session, stocks have seen further downside over the course of the trading day on Wednesday. The major averages have all moved sharply lower, with the tech-heavy Nasdaq pulling back well off yesterday's record closing high.

In recent trading, the major averages have climbed off their worst levels but continue to post steep losses. The Dow is down 758.70 points or 2.9 percent at 25,397.40, the Nasdaq is down 256.30 points or 2.5 percent at 9,875.07 and the S&P 500 is down 85.36 points or 2.7 percent at 3,045.93.

The sell-off on Wall Street comes as it seems traders can no longer ignore the spiking number of new coronavirus cases in several U.S. states.

Further selling pressure was generated after Florida's Department of Health confirmed 5,508 new cases of COVID-19 on Tuesday, reflecting a new single-day record. The Sunshine State now has a total of 109,014 confirmed cases.

New York Governor Andrew Cuomo also recently announced that out-of-state visitors coming to New York, New Jersey and Connecticut from regions with high COVID-19 rates will be required to quarantine for 14 days.

A CNBC analysis of data compiled by Johns Hopkins University found the nation's seven-day average of daily new Covid-19 cases spiked more than 30 percent compared with a week ago.

Texas, Arizona and California are among several states that have seen significant increases in coronavirus cases, with California reporting 6,219 new cases on Monday.

During congressional testimony on Tuesday, White House health advisor Dr. Anthony Fauci warned of a "disturbing surge" in coronavirus infections.

President Donald Trump has repeatedly blamed the jump in coronavirus cases on increased testing and doubled-down on his suggestion that testing should be slowed.

With the exception of the sharp pullback seen earlier this month, traders have largely shrugged off the concerns about the increase in coronavirus cases amid continued optimism about a quick economic recovery.

Sector News

Energy stocks continue to see substantial weakness in mid-day trading, as the price of crude oil for August delivery plunges $2.98 to $37.39 a barrel amid concerns about rising inventories.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index has plummeted by 8.7 percent, the NYSE Arca Oil Index is down by 5.5 percent and the NYSE Arca Natural Gas Index is down by 4.9 percent.

Considerable weakness also remains visible among banking stocks, as reflected by the 4.9 percent nosedive by the KBW Bank Index.

Commercial real estate stocks have also moved sharply lower over the course of the session, dragging the Dow Jones U.S. Real Estate Index down by 4.4 percent.

Simon Property Group (SPG) is posting a steep loss after a report from the Wall Street Journal said the mall operator is teaming up with Brookfield Property Partners (BPY) in exploring a bid for bankrupt retailer J.C. Penney

Steel, housing, brokerage, and networking stocks are also seeing significant weakness on the day, reflecting a broad based sell-off on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index edged down by 0.1 percent, while China's Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets all showed substantial moves to the downside on the day. While the German DAX Index plunged by 3.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index tumbled by 3.1 percent and 2.9 percent, respectively.

In the bond market, treasuries have moved higher over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.2 basis points at 0.687 percent.

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