Houston Chronicle

Stocks slide as coronaviru­s cases surge

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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 percent, 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, which have been leading the market higher as it bounced back from a plunge in March, 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 U.S. states and regions around the world could continue to lift the spring lockdowns put in place to slow the spread of the coronaviru­s. Economic data have been positive, helping fuel the cautious optimism. But the rise in new infections is stoking worries that the reopening of 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?”

Cruise lines, which would stand to suffer greatly if travel restrictio­ns are extended, were among the biggest losers in the S&P 500. Norwegian Cruise Line, Carnival and Royal Caribbean Cruises all fell more than 11 percent. Traders also hammered casino operators. Wynn Resorts lost 11 percent and MGM Resorts Internatio­nal dropped 8.3 percent. Shares in airlines slumped, too. Delta Air Lines slid 7.8 percent. 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 percent, to 25,445.94. The Nasdaq, which was coming off its second all-time high this week, fell 222.20 points, or 2.2 percent, 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 percent, to 1,389.74.

The market has been mostly in rally mode since April as investors focused on the prospects for an economic turnaround as broad areas of the economy reopened. Recently, some encouragin­g economic reports helped lift expectatio­ns that the reopening of businesses in the U.S. and elsewhere could pull the economy out of a deep recession sooner rather than later.

In energy trading, benchmark U.S. crude oil slid 5.8 percent to settle at $38.01 a barrel.

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