Stocks tumbled on Thursday, relinquishing most of their weekly gains, amid fresh fears over the coronavirus and its potential to dismantle a fragile economy.
The Dow Jones Industrial Average sank 419 points or 1.6%. The S&P 500 dropped 1.3%, while the Nasdaq Composite lost 0.6%, limiting the likelihood investors might see another record close.
Stocks that stand to gain from the economy reopening suffered again. United Airlines, Delta, and American all dropped more than 4%. Carnival Corp dropped 3.7% and Royal Caribbean slid 5.3%. Kohl’s fell by 5.8%.
Stocks hit their lows of the day after Florida reported a record in coronavirus-related hospitalizations. The state also reported an unprecedented surge in Covid deaths. They recovered slightly, however, after Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Moderna’s coronavirus vaccine candidate will likely enter phase 3 of trials by the end of July.
“There’s less reason for optimism now than there was in April,” said Jason Thomas, chief economist at AssetMark. “In April, we had a view on how long it would take to get a vaccine, and there was the possibility that we could open the country in stages and see a sustainable recovery.”
“We’re still looking at a vaccine sometime early next year, but it’s become clear that it’ll be very difficult to open without causing a renewed surge” in coronavirus cases, Thomas added.
Stocks had changed from the tenor earlier this week as investors have grown concerned the recent global coronavirus spikes could generate a protracted economic downturn and require that people remain at home for longer.
“A lot of these names are benefiting from the at-home play,” said Douglas Busch, founder of ChartSmarter. Busch noted that, from a technical perspective, he’d like to see consolidation in some of the major tech stocks but thinks they have further upside moving forward.
Over 3 million coronavirus cases have been confirmed in the U.S. alone, according to Johns Hopkins University. Worldwide, more than 12 million cases have been confirmed.
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