Stocks slam into reverse as virus keeps scarring economy

Wall Street got a painful reminder of the threat the coronavirus pandemic poses to the economy Monday, and a big early gain for stocks suddenly flipped to losses after California rolled back its reopening plans amid a spike in cases.

The S&P 500 fell 0.9 percent, 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 nearly 15 percent 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 percent.

Technology stocks took the hardest hits, highlighted by Microsoft’s swing from an early gain of 1 percent to a loss of 3.1 percent. 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 226.60 points, or 2.1 percent, to 10,390.84. The Dow Jones Industrial Average squeaked out a gain of 10.50 points, or less than 0.1 percent, to 26,085.80. It had earlier been up 563 points. The S&P 500 dropped 29.82 to 3,155.22.

In a signal investors are downgrading their expectations for the economy, Treasury yields fell and smaller stocks did worse than their larger rivals. The Russell 2000 index of small-cap stocks lost 1.3 percent.