Wall Street's main indexes have closed higher after choppy trading, with bank stocks soaring ahead of annual stress test results and helping to offset investor jitters over alarming increases in coronavirus cases.
The Standard & Poor's 500 index skidded 2.6%, shedding its gains for the week and leaving it almost in the red for the month. At this point, the market looks like it refuses to accept any type of economic reality, because the NASDAQ 100 is comprised of all of the "go to" names on Wall Street. The surge in the number of confirmed new coronavirus cases has undercut the optimism for an economic turnaround that helped drive a rebound for stocks for most of the past three months.
Technology companies, which have led the market higher as it bounced back from a plunge in March, accounted for the biggest slice of the US market's pullback.
The Dow Jones Industrial Average fell 710.16 points, or 2.72%, to 25,445.94, the S&P 500 lost 80.96 points, or 2.59%, to 3,050.33 and the Nasdaq Composite dropped 222.20 points, or 2.19%, to 9,909.17. The Nasdaq, which hit an all-time high earlier this week, gained 1.1%, to 10,017. Despite the shedding its gains for June, the S&P 500 is on pace for its best quarter since the fourth quarter of 1998.
Markets have been rallying recently on hopes that USA states and regions around the world could continue to lift the spring shutdowns put in place to slow the spread of the coronavirus. Specifically, as reported by the Washington Post earlier this week, seven U.S. states - including Arkansas, Arizona, California, North Carolina, South Carolina, Tennessee and Texas - reported the largest spike in Covid-related hospitalisations since the coronavirus pandemic began. Deaths and hospitalizations have been rising in parts of the country, especially in the South and West.
The United States has recorded the second-largest rise in infections since the health crisis began, with a flare-up of cases in states where restrictions meant to contain the disease were lifted early. Small company stocks were faring worse than the rest of the market. "It's going to weigh on sentiment to some extent, but overall we think the economy is on the mend and the recovery is on its the way". As such, the Fed suggested banks should suspend share buyback plans and keep dividend payments capped at current levels. Goldman Sachs Group fell 6.3%, while Wells Fargo retreated 5.6%. Shares in Verizon were down 2.3%.
Meanwhile, Nike shares slid 3.6% on the back of a surprising quarterly loss for the apparel giant. Delta Air Lines slid 7.8%. Bond yields fell, another sign of caution in the market. It tends to move with investors' expectations for the economy and inflation.
The biggest decliner among the 11 major S&P sub-sectors was energy, down 5.5%, as crude prices slumped on news of record storage and concerns about demand.
Benchmark U.S. crude oil was unchanged at $40.46 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the worldwide standard, fell 5.4% to close at $40.31 a barrel.
Technology companies, which have been leading the market higher as it bounced back from a plunge in March, accounted for the biggest slice of the market's pullback.