Dow plunges 2.7% lower as increased coronavirus cases slow US recovery

A patient is tested for coronavirus at a testing site in Washington, DC, on June 10, 2020. PHOTO: AFP

NEW YORK (AFP) - Wall Street stocks tumbled on Wednesday (June 24) on increasing signs that higher coronavirus cases in the United States will slow the recovery in the world's biggest economy.

The Dow Jones Industrial Average slumped more than 700 points, or 2.7 per cent, to 25,445.94.

The broad-based S&P 500 slid 2.6 per cent to 3,050.33, while the tech-rich Nasdaq Composite Index shed 2.2 per cent to 9,909.17, retreating from a record.

Numerous states in the western and southern United States have reported record coronavirus cases in recent days, prompting more local officials and private companies to freeze reopenings or retreat from prior steps to relaunch activity.

Texas Governor Greg Abbott told a television interview that the "safest" place for residents was home unless they had to go out, while Apple said it was reclosing stores in Houston, the state's biggest city.

Meanwhile, the governors of New York, Connecticut and New Jersey announced they would impose a mandatory 14-day quarantine to people traveling to their states from areas with high Covid-19 infection rates.

After rising most of the last couple of months, the market "was poised for a pullback of some sort," said Quincy Krosby, chief market strategist at Prudential Financial.

The market is spooked not only by higher coronavirus cases in the United States, but also increased hospitalisations in many places.

"The question is how much this is going to cause the economy to slow down," Krosby said. "The market is vulnerable to these headlines."

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There were other negative news catalysts, including an announcement the US Trade Representative is weighing a new list of US$3.1 billion (S$4.3 billion) in European goods that could be subject to tariffs, and a downcast outlook from the International Monetary Fund.

While the losses were broad-based, travel-oriented companies were especially weak, including Wynn Resorts, down 11 per cent, Delta Air Lines, down 7.7 per cent and Marriott International, down 6.2 per cent.

Petroleum-linked shares were also under pressure, with Exxon Mobil shedding 4.7 per cent and Halliburton losing 8.9 per cent.

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