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U.S. Stocks Close Sharply Lower On Virus Jitters, Banks Stress Tests Report

wallstreet2 26jun20 lt

U.S. stocks ended on a highly negative note on Friday after spending the entire session in the red as investors turned cautious and chose to exit counter following a sharp surge in new coronavirus infections in several states.

The major averages all ended with sharp losses. The Dow plunged 730.05 points or 2.84 percent to settle at 25,015.55, registering its steepest fall in two weeks. The Nasdaq slid 259.78 points or 2.59 percent to 9,757.22 and the S&P 500 tumbled 74.71 points or 2.42 percent to 3,009.05.

The Dow shed 3.3 percent in the week, while the Nasdaq and the S&P 500 lost 1.9 percent and 2.9 percent, respectively.

Banking stocks, which had scored strong gains in the previous session reacting to news U.S. regulators plan to ease banking regulations and allow banks to more easily make investments in riskier funds, turned easy today after the Fed released the results of the stress tests on banks. Disappointing earnings report from Nike also hurt sentiment.

The Fed said the nation's biggest banks are healthy but could suffer up to $700 billion in losses on soured loans if the economy languishes. It also ordered certain banks to cap dividends and suspend share buyback to conserve funds.

Airline and energy stocks also reeled under selling pressure with rising cases of virus infections weighing on them.

The surge in new cases due to the coronavirus has raised the possibility of states reimposing restrictions on businesses. The Trump administration has ruled out another lockdown, but Texas Governor Greg Abbott has announced that the state will pause its reopening plan due to the spike in coronavirus cases.

The U.S. Centers of Disease Control and Prevention (CDC) warned that the number of infected people in the U.S. is most likely 10 times higher than what was officially reported.

CDC Director Robert Redfield told reporters in a conference call that his estimate is based on growing data from antibody testing. That means as many as 24 million Americans might have contracted the coronavirus.

Meanwhile, World Health Organization (WHO) head Tedros Adhanom Ghebreyesus said that global infections are expected to top 10 million next week.

Prominent losers in the session were Goldman Sachs (GS), which plunged more than 8 percent, and Nike (NKE), which shed over 7 percent. Nike reported net loss of $790 million, or $0.51 per share, during the fourth quarter compared with net income of $989 million, or $0.62 per share, a year ago.

JP Morgan Chase and American Express lost more than 5 percent and 4 percent, respectively. Apple (AAPL), Coca-Cola (KO), Boeing (BA) and Chevron (CVX) also ended sharply lower.

Cisco Systems (CSCO) and DuPont (DWDP) bucked the trend and ended with strong gains.

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