Stocks skid as new virus cases surge to highest in two months

Wall Street’s recent rally hit a snag Wednesday as new coronavirus cases in the U.S. climbed to the highest level in two months, dimming investors’ hopes for a relatively quick economic turnaround.

The S&P 500 skidded 2.6%, shedding its gains for the week and leaving it nearly in the red for the month. The sell-off, which followed steep drops in European markets, accelerated around mid-morning on news that New York, New Jersey and Connecticut will require visitors from states with high infection rates to quarantine for 14 days.

Technology companies accounted for the biggest slice of the pullback. Financial, health care, communication services and industrial sector stocks also took heavy losses. Energy stocks fell the most as the price of oil dropped sharply.

Markets have been rallying recently on hopes that regions around the world could continue to lift the spring lockdowns put in place to slow coronavirus. Economic data have been positive, helping fuel the cautious optimism. But the rise in new infections is stoking worries that businesses may have to be curtailed again.

“We’ve created this optimistic trade over the last few weeks,” said J.J. Kinahan, chief strategist with TD Ameritrade. “Are we going to be able to get back to business as fast as it has been priced into equities?”

The S&P 500 dropped 80.96 points to 3,050.33. Despite the sharp sell-off, the S&P 500 is still on pace for its best quarter since the fourth quarter of 1998. The Dow Jones Industrial Average lost 710.16 points, or 2.7%, to 25,445.94. The Nasdaq, which was coming off its second alltime high this week, fell 222.20 points, or 2.2%, to 9,909.17. Small company stocks fared worse than the rest of the market. The Russell 2000 index gave up 49.60 points, or 3.4%, to 1,389.74.