The stock market roller coaster ride continued on Wednesday with the Dow losing 700 points as pocketed spikes in COVID-19 cases raised fears that economic recovery could be rockier than investors had hoped.
The Dow Jones industrial average index of blue-chip stocks ended the day down 710.16 points, or 2.7 percent, to 25445.94, while the S&P 500 dropped 80.96 points, or 2.50 percent, to 3050.33.
Even the tech-heavy Nasdaq — filled with stocks believed to be more immune to the pandemic — fell 2.19 percent, a loss of 222.2 points, ending a nine-day winning streak.
The drops come amid skyrocketing infections in states like Florida and California, with the later adding a record 7,000-plus cases on Wednesday. Florida said its confirmed cases jumped by 5,508, while Texas saw a jump of 5,489 cases.
“Investors are clearly anxious about new cases,” said Jason Ware, chief investment officer at Albion Financial Group. “Another surge could impact the reopening of the economy and the recovery.”
Companies that have been hardest hit by the pandemic led Wednesday’s declines.
Shares of cruise ship company Carnival fell 11 percent, or $2 a share, to $16 while Norwegian Cruise Line dropped 12 percent to $15.80. The S&P also downgraded Norwegian’s credit rating on fears that it will suffer a prolonged period of weakened demand.
Shares of airplane maker Boeing dropped 6 percent, or $11.19 a share, to $176,69, while Delta dropped 7 percent to $27.34 shares.
Of course, stock investors have been down this road many times since the pandemic began. And each time stocks swoon, investors are later cheered by stimulus promises by the Federal Reserve or Congress, or signs of a quick recovery.
The surge in coronavirus cases in states that have reopened fastest raises questions about whether even the Fed has the power to keep vulnerable sectors of the economy, like travel and leisure, afloat without a a vaccine.
“The market has been optimistic that the economy is re-opening and that life would get somewhat back to normal,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance. “But the virus may have other ideas.”
Adding to investors woes are growing trade tensions between the US and Europe as the European Union reportedly mulls a plan to block visitors from countries with severe outbreaks, including the US.
In response to a long-running dispute over subsidies to aircraft manufacturers, US officials are considering tariffs on $3.1 billion worth of products from the EU countries, including olives and malt beer.
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