Stocks fell Friday amid concerns over the rising number of coronavirus cases in the U.S. and its impact on the economic recovery.
The Dow Jones Industrial Average declined 500 points, or about 2%, while S&P 500 and Nasdaq Composite dropped 1.5% and 1.7%, respectively. Those losses put the major averages down at least 1.3% each for the week.
Texas Gov. Greg Abbott said Friday the state will roll back some of its reopening measures as coronavirus cases and hospitalizations continue to rise. “At this time, it is clear that the rise in cases is largely driven by certain types of activities, including Texans congregating in bars,” Abbott said in a release.
“Coronavirus cases are spiking and reopenings are being delayed, which at a minimum will impact earnings,” said Tom Essaye, founder of The Sevens Report. “The resurgence in coronavirus cases is raising concerns that the rebound may be short-lived as voluntary or potentially more government mandated economic shutdowns are becoming increasingly likely.”
Shares of companies that would benefit from an economic reopening tumbled. United Airlines, American and Delta all slid more than 4%. Cruise operator Norwegian Cruise line dropped about 4%.
The moves came after the Fed’s annual stress test of the major banks showed some banks could get close to minimum capital levels in scenarios related to the coronavirus pandemic. Because of this, banks must suspend share repurchase programs and cap dividend payments at current levels for the third quarter. Wells Fargo and Capital One may be forced to cut their dividends.
“While I expect banks will continue to manage their capital actions and liquidity risk prudently, and in support of the real economy, there is material uncertainty about the trajectory for the economic recovery,” Fed Vice Chair Randall Quarles said in a statement.
The announcement sent some bank shares lower on Friday. Bank of America and JPMorgan Chase both dipped more than 3%. Wells Fargo slid 4% and Goldman Sachs fell 4.75%. Bank stocks were coming off sharp gains, rallying more than 3% during regular trading Thursday.
Meanwhile, Nike shares slid 3.6% on the back of a surprising quarterly loss for the apparel giant. The company reported a loss of 51 cents per share and revenue of $6.31 billion for its fiscal fourth quarter. Nike’s quarterly revenue reflected a drop of 38% on a year-over-year basis.
The losses on Friday came despite a record rise in consumer spending in May. The Commerce Department reported Friday that spending increased 8.2% last month, a positive sign for the U.S. economy amid a growing number of negative coronavirus headlines.
The government’s report on how much Americans spent on goods and services in May was the largest one-month gain dating back to records beginning in 1959. Consumer spending represents more than two-thirds of economic demand in the U.S.
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