California pandemic closures sink stocks

Wall Street got a painful reminder that the coronavirus pandemic isn’t going away, and a big early gain for stocks suddenly flipped to losses after California showed how it’s still scarring the economy.

The S&P 500 fell 0.9%, with all the losses accumulating in the last hour of trading, after California said it will extend closures of bars and indoor dining across the state, among other restrictions. It’s one of many states across the U.S. West and South where coronavirus counts are accelerating and threatening the budding recovery that just got underway for the economy.

The announcement from California, which accounts for 15% of the country’s economy, combined with an escalation by the White House in its tensions with China to knock the market down from its earlier gain of 1.6%.

Technology stocks took the hardest losses, highlighted by Microsoft’s swing from an early gain of 1% to a loss of 3.1%.

It’s a sharp step back for tech-oriented giants, which have been cruising higher through the pandemic on bets that they can keep growing almost regardless of the economy.

The tech losses helped drag the Nasdaq composite down 2.1%. The Dow Jones Industrial Average squeaked out a gain of less than 0.1%.

Adding to nervousness in the market was the White House’s decision to reject nearly all Chinese claims in South China Sea. The world’s largest economies have been sparring over everything from the coronavirus pandemic to human rights.