The US Stock Market Declined After A Recent Rally Amid Concerns About The Economy
US stock indexes fell sharply after trading on Tuesday, with the Nasdaq and S and P 500 breaking a five-day series of gains amid investor concerns about the prospects for a global economic recovery in the face of the continuing spread of the coronavirus.
"We are taking a wait-and-see approach," said Oanda analyst Craig Erlam, quoted by the Wall Street Journal. According to him, traders are optimistic about encouraging economic data, but still have concerns about the pandemic, which explains the market movement.
According to MarketWatch, additional pressure on Tuesday came from statements by a senior aide to us Vice President Mike Pence that the next package of support for the economy will be limited to $1 trillion or even less. The US administration made this request to Congress, pence's chief of staff, mark Short, said in an interview with Bloomberg.
The rate of spread of COVID-19 continues to grow, the pandemic of coronavirus infection has not yet reached a peak, world health organization Director-General Tedros Adhanom Ghebreyesus said on Tuesday.
"At the moment, 11.4 million cases of COVID-19 infection and more than 535 thousand deaths have been recorded. The outbreak is accelerating, and we have not reached the peak of the pandemic, " Gebreyesus said at a who briefing.
New outbreaks of coronavirus are observed in different regions of the world, from Japan to Iran and Australia, and the United States, the number of infected since the beginning of the pandemic has exceeded 3 million. The several American States, including California, Florida, and Texas, were forced to return some of the previously canceled restrictive measures.
On Tuesday, US President Donald Trump officially notified Congress of the country's withdrawal from the who amid the pandemic. In mid-April, Trump decided to temporarily suspend US participation in who until an investigation is conducted into the organization's failed response to the COVID-19 outbreak.
The recovery of the US economy, which began after the lifting of restrictive measures that were introduced to curb the spread of coronavirus infection, may stop due to an increase in the number of new infections in several major States, warns the Chairman of the Federal Reserve Bank (FRB) of Atlanta, Raphael Bostic.
In an interview with the Financial Times, Bostic said that the latest data points to an "equalization" of economic activity both in terms of business return to work and in terms of population mobility. According to him, the Federal Reserve of Atlanta is trying to understand "whether the alignment of economic activity is the beginning of a stable trend or just a pause."
San Francisco fed Chairwoman Mary Daly said on Tuesday that the US unemployment data underestimates the economic damage caused by the coronavirus. Given that unemployment is at 11.1%, the Central Bank will have to take further measures to support the economy, said the head of the Federal Reserve of Richmond, Thomas Barkin.
According to the forecast of the Organization for Economic Cooperation and Development (OECD), unemployment rates in the developed world this year will be higher than at any time since the great depression, and will not return to pre-crisis values until at least 2022.
The organization on Tuesday warned against premature abandonment of emergency measures aimed at supporting employment and said that the authorities of countries should launch new programs to encourage companies to hire staff, especially those employees who have entered the labor market for the first time.
The European Commission on Tuesday lowered its economic forecast for 2020-2021. Brussels now expects the EU economy to fall by 8.3% this year and grow by 5.8% next year. In May, the European Commission predicted a 7.4% reduction in EU GDP in 2020 and a 6.1% growth in 2021.
Shares of companies in the tourism sector fell by the end of trading on Tuesday. The price of air carriers United Airlines Holdings (SPB: UAL) and American Airlines Group (SPB: AAL) fell by 7.6% and 7%, respectively. Royal Caribbean Cruises (SPB: RCL) and Norwegian Cruise Line Holdings each lost about 5%.
Shares of energy companies, including Devon Energy (SPB: DVN) Corp., also fell in price. - by 7.3% and Valero Energy (SPB: VLO) Corp. - by 5.9%. Goldman Sachs Group Inc.'s stock price fell 3.9%, while JPMorgan Chase & Co. (SPB: JPM) fell 2.8%.
The capitalization of the Burger chain Shake Shack decreased by 6.6%, as preliminary data on the company's sales in the second quarter did not meet market expectations.
Novavax Inc.'s stock price soared 31.6%. The American pharmaceutical company said it would receive $1.6 billion from the US government to Fund an experimental coronavirus vaccine and ensure large-scale production. With this funding, Novavax intends to deliver 100 million doses of the vaccine, which is likely to happen by the end of the year.
Shares of Regeneron Pharmaceuticals (SPB: REGN) Inc. rose 2.2%. The company received a federal contract worth $450 million to produce several thousand doses of an experimental drug for coronavirus, which the government will distribute to patients for free if its use is approved by regulators.
The price of Sunrun Inc. securities jumped by 22.6%. The largest supplier and operator of rooftop solar panels in the United States has agreed to acquire rival Vivint Solar Inc.for about $3.2 billion, including debt. Shares of Vivint Solar, which ranks second in the US solar energy market, soared 38.2%.
The market value of Tesla Inc. (SPB: TSLA) rose 1.1% on the back of an increase in the target share price of the American electric car manufacturer by an analyst at Morgan Stanley.
The Dow Jones Industrial Average fell by 396.85 points (1.51%) to 25,890.18 points at the close of the market.
The Standard & Poor's 500 lost 34.40 points (1.08%) to 3,145.32 points.
The Nasdaq Composite dropped 89.76 points (0.86%) to 10,343. 89.