U.S. markets and stock exchange traded funds retreat as coronavirus cases pop up in several states, fueling fears that officials could reinstate lockdown measures and stifle an economy that is just getting back on its feet.
On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) was down 2.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 2.9%, and SPDR S&P 500 ETF (NYSEArca: SPY) dropped 2.8%.
The U.S. tallied the second-largest spike in infections since the coronavirus pandemic began after states rolled back shutdown measures meant to quarantine the spread of COVID-19, Reuters reports.
“There is a sudden perception change among investors related to the extent of a new round of virus cases,” Andre Bakhos, managing director at New Vines Capital LLC, told Reuters. “The greatest focus is on COVID-19 (news) more than anything else until we get a more granular look at what’s going on.”
Arizona, Texas, and California reported daily records for infections Tuesday, the Wall Street Journal reports. Texas Gov. Greg Abbott and Florida Gov. Ron DeSantis said they will increase enforcement of social-distancing guidelines while California Gov. Gavin Newsom said earlier this week that the state could enact stricter measures on businesses and social gatherings once again.
“If this does get worse and more endemic, they will have to lock down some of these states again,” Charles Hepworth, an investment director at GAM Holding, told the WSJ.
The International Monetary Fund has already warned that the pandemic is causing wider and deeper cuts into the global economy than previously thought, causing the institution to lower 2020 global output forecasts further to contract 4.9% from 3.0%. Advanced economies have been harder hit, with the U.S. output projected to shrink 8.0%, or 2 percentage points worse than April predictions.
“The steep decline in activity comes with a catastrophic hit to the global labor market,” IMF said in an update to its World Economic Outlook report.
Further weighing on sentiment, the U.S. is considering tariffs on $3.1 billion in products from the U.K., France, Germany, and Spain due to a long-running dispute over government subsidies to aircraft manufacturers.
“The tensions between the Europeans and the U.S. have been bubbling under the surface for quite some time,” Jane Foley, head of foreign-exchange strategy at Rabobank, told the WSJ. “Anything that suggests there is going to be tension on trade is bad for the global economy.”
For more information on the markets, visit our current affairs category.
newETFs.io respects the hard work of others and gives all credit to the remarkable folks at ETFTrends.com. This excerpt/article was pulled from their RSS feed; click here to view the original. Please note that on occasion, the RSS feed will not have the author. When this happens this site defaults the author to "News". Make no mistake, this excerpt/article was not created by newETFs.io, it was simply shared with you.