Stocks finished sharply lower Wednesday as several U.S. states saw spikes in new coronavirus cases.
With Florida, Arizona, Texas and California reporting new daily records of infections, investors have been growing increasingly worried that plans to reopen stalled economies could be curtailed to halt the spread of the virus, slowing the pace of recovery.
The governors of New York, New Jersey and Connecticut said they would begin requiring residents from states with virus hot spots to quarantine for two weeks upon arrival.
The International Monetary Fund slashed its forecast for 2020 global GDP again, this time estimating a contraction of 4.9%. In April, the IMF estimated a decline of 3%.
The Dow Jones Industrial Average finished down 710 points, or 2.72%, to 25,445, the S&P 500 declined 2.59% and the Nasdaq slid 2.19%. The tech-heavy Nasdaq closed at a record on Tuesday.
At one point during Wednesday’s session, the Dow was down as much as 860 points, or 3.3%.
“The market has been optimistic that the economy is reopening and that life would get somewhat back to normal, but the virus may have other ideas and unfortunately increased interactions between people – which is critical for the economy to regain its former luster – leads to increased infections,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Dr. Anthony Fauci, who heads President Donald Trump’s coronavirus task force, told lawmakers that the rising infection and hospitalization trend was “disturbing,” but said neither he nor his colleagues were asked to slow the pace of testing by White House officials.
Texas recorded more than 5,000 new cases in the past 24 hours, a record daily toll, according to Gov. Greg Abbott. The governor said he didn’t want to backtrack on reopening the state but urged residents to take greater precautions, saying people shouldn’t go out unless absolutely necessary.
“The safest place for you is at home,” Abbott said, The Wall Street Journal reported.
California also reported more than 5,000 new cases and hospitalizations in the state hit a record of 3,700.
The U.S. has 2,366,961 cases of the coronavirus, the most in the world, according to Johns Hopkins CSSE. Deaths in the U.S. have risen to 121,662, also the most in the world.
Across the U.S., 26,096 new covid-19 cases had been reported as of 3 p.m. ET Wednesday.
Also denting sentiment was a possible resurfacing of trade tensions between the United States and Europe.
The U.S. has been weighing new tariffs on $3.1 billion of exports from France, Germany, Spain and the U.K., according to Bloomberg, which cited a notice published late Tuesday evening.
Meanwhile, the European Union, which is working on plans to reopen the 27-member European Union on July 1, reportedly could keep out American travelers this summer.