Dow Slumps on Fears Rising Covid Cases Could Trigger Second Wave of Pain

By Yasin Ebrahim

Investing.com – The Dow plunged Thursday, suffering its biggest one-day decline since March, as a jump in new Covid-19 infections that threatens to slow down the pace of the reopenings prompted investors to ditch stocks and flee to safety.  

The Dow Jones Industrial Average fell 6.90%, or 1,861 points. The S&P 500 fell 5.27%, while the Nasdaq Composite slumped 5.27%. 

New coronavirus cases increased by 20,486 from 17,376 yesterday, the Center for Disease Control reported, taking the total infections nationwide to 2 million with nearly 116,00 dead so far.

With new infections on the rise, investors were forced to assess whether their recent bets on the swift rebound in the economy may have been overdone just a day after the Federal Reserve's gloomy outlook on the economy.    

Energy stocks, travel, energy, and bank stocks, which together had been pushed on the progress of the economic reopening, bore the brunt of selling, sending the broader market sharply lower.

Citigroup (NYSE:C) fell 13%, Wells Fargo (NYSE:WFC) was down 9.8% and JPMorgan (NYSE:JPM) fell 8.3%, pressured by falling Treasury yields and fresh fears that a long road to economic recovery could force banks to sock away more cash to offset loan defaults.

American Airlines (NASDAQ:AAL), United Airlines (NASDAQ:UAL), Delta Air Lines (NYSE:DAL), Carnival (NYSE:CCL), and Norwegian Cruise (NYSE:NCLH) were among the biggest decliners in travel.

Losses in energy, meanwhile, were exacerbated by a slump in oil prices as concerns about demand persisted a day after the U.S. reported that weekly crude supplies swelled to a record last week.

Technology, which has held firm in recent days, also came under pressure, paced by a decline in FANG stocks and chipmakers.

The Philadelphia Semiconductor Index slumped 6%, led by declines in Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Micron Technology Inc (NASDAQ:MU).

On the economic front, the labor market continues to steady, with initial jobless claims falling to 1.5 million in the week ended June 6, less than the 1.6 million expected.

"On the heels of last week’s better-than-expected May employment report, this morning’s continued decline in the pace of weekly claims reinforces the notion the U.S. labor market is on the mend – or at least noticeably improving from more massive weakness reported earlier in Q2," Stifel added.

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