Wall Street closed sharply lower on Wednesday as several large states reported record high new cases of the coronavirus. Investors' confidence was further dented as the news that the Trump Administration is considering imposing tariffs on various Eurozone countries surfaced. All three major stock indexes posted their worst single-day decline since Jun 11.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 2.7% or 710.16 points to close at 25,445.94. Notably, all 30 stocks of the blue-chip index ended in the red. The S&P 500 tanked 2.6% to end at 3,050.33. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) plummeted 5.6%, 3.5% and 3.5%, respectively. Notably, all eleven sectors of the benchmark index closed in negative territory.
Meanwhile, the tech-heavy Nasdaq Composite ended at 9,909.17, slipping 2.2% or 222.20 points due to weak performance by large-cap stocks and reversing a eight-day winning streak. Major loser of Nasdaq Composite was Wynn Resorts Ltd WYNN with a decline of 11%. Wynn Resorts carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was up 7.9% to 33.84. A total of 13.35 billion shares were traded on Wednesday, higher than the last 20-session average of 13.31 billion. Decliners outnumbered advancers on the NYSE by a 6.84-to-1 ratio. On Nasdaq, a 4.58-to-1 ratio favored declining issues.
Resurgence of Coronavirus Infections
On Jun 23, three states - Florida, California and Texas reported a record high single-day jump in coronavirus cases of 5,508, 7,000 and 5,489, respectively. According to data compiled by Johns Hopkins University, the 7-day average of daily new COVID-19 cases jumped more than 30% compared with a week ago in the United States.
Moreover, the governments of New York, New Jersey and Connecticut ordered visitors from certain hotspot states to quarantine for 14 days. Per Bloomberg, Texas, Florida, Arizona and California are considering slowing or reversing reopening plans of their economies. Meanwhile, The Walt Disney Co. DIS has postponed two of its California-based theme parks that were scheduled to reopene on Jul 17.
The U.S. Government Reportedly Considering Tariffs on Eurozone
According to Bloomberg, the U.S. government is considering imposing $3.1 billion of tariffs on major European economies like France, Germany, Spain and the U.K. Per a notice, the Trump Administration wants to impose new tariffs on European exports like olives, beer, gin and trucks. At the same time, the government would like to hike duties on aircrafts, cheese and yogurt. Meanwhile, POLITICO reported that the U.S. government is also considering re-imposing tariffs on aluminum imports from Canada from Jul 1.
IMF Reduces Global Growth Outlook
The International Monetary Fund projected that global growth will shrink by 4.9% in 2020. The agency forecast a decline of 3% in March. Global economy is likely to grow at 5.4% in 2021. Earlier the World Bank and the OECD trimmed global economic growth projection by 5.2% and 6%, respectively, for 2020.
The Energy Information Administration reported that the U.S. crude inventories jumped to a record high 1.4 million barrels last week due to higher production. Consequently, the price of the West Texas Intermediate crude declined 5.9% to settle at $38.01 per barrel. The Brent crude was down 5.5% to close at $40.29 a barrel.
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