Business World

Wall Street falls as COVID-19 spike hits travel stocks


NEW YORK — Stocks on Wall Street fell for a second straight day on Tuesday as a global spike in coronaviru­s cases hit travel-related shares and investors had second thoughts about big US banks’ apparently stellar earnings last week.

Kansas City Southern surged by 15.2% on the prospect of a bidding war after Canadian National offered about $30 billion for the US railroad, about $5 billion more than an earlier offer from Canadian Pacific.

Boeing Co. slid by 4.1% on the unexpected departure of its finance chief, the latest shock to hit the plane maker as it fights to recover from the pandemic and 737 MAX crisis.

Investors piled into defensive sectors considered relatively safe during times of economic uncertaint­y, lifting real estate, utilities, consumer staples and healthcare as financials and energy shares fell hard.

Shares of airline operators and cruise liners including JetBlue Airways, American Airlines, Norwegian Cruise Line and Carnival Corp., which were hammered last year during lockdowns but have climbed recently on the reopening hopes, fell by more than 4%.

Some of the recent optimism about the leisure industry has waned as the reopening might take a bit longer than initially thought, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“We’re not out of the woods yet when it comes to the COVID virus and getting to where global economies are reopening,” he said. “Some of that enthusiasm has diminished.”

A leading epidemiolo­gist at the World Health Organizati­on said on Monday the latest rise in COVID-19 infections worldwide reflected increases among all age groups.

Wall Street scaled record highs last week as investors bet on stocks such as industrial­s and miners that are seen as benefiting from the economic rebound, while highly valued technology stocks regained favor after a retreat in bond yields.

The Dow Jones Industrial Average fell by 0.75% to 33,821.3. The S&P 500 shed 0.68% to 4,134.94 and the Nasdaq Composite dropped by 0.92% to 13,786.27.

It was the first back-to-back declines for the S&P since the end of March.

Volume on US exchanges was 10.21 billion shares, compared with the 10.59 billion average for the full session in the past 20 trading days.

The CBOE volatility index, known as Wall Street’s fear gauge, climbed above 19 points for the first time since March 31, before closing at 18.71.

JPMorgan Chase & Co., Bank of America Corp., Citigroup, Inc. and Wells Fargo & Co. led financials lower as analysts reassessed their earnings reports, said Dick Bove, senior research analyst at Odeon Capital Group.

Accounting changes on how to report loan reserves skewered numbers when compared to a year ago, he said.

“People made the assumption this was a gangbuster­s quarter for the banking industry when that’s far from the truth,” Mr. Bove said, adding that second-half profits are expected to be very strong. —

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