S&P closes lower as new COVID-19 cases surge

NEW YORK (Reuters) – The S&P 500 closed lower on Wednesday as news of spiking pandemic data and the prospect of a new round of economic lockdowns dampened investor optimism over signs of economic recovery.

FILE PHOTO: Traders exit the 11 Wall St. door of the New York Stock Exchange (NYSE) in New York City, New York, U.S., June 11, 2020. REUTERS/Brendan McDermid

The S&P 500 and the Dow reversed earlier gains and snapped a three-day winning streak. Tech shares led the Nasdaq into the black.

Worries over a resurgence in the pandemic’s spread persist, as new coronavirus cases hit a record level in Oklahoma just days before President Donald Trump’s expected campaign rally in Tulsa.

The numbers of new cases are rising sharply in about six U.S. states, according to a Reuters analysis, and authorities in Beijing have ramped up mobility restrictions in their efforts to contain a new COVID-19 outbreak.

“There are periodic points of news flow where the positive news will carry the market and negative news will pressure the market,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “It’s a return of health concerns versus economic optimism.”

“There’s a tug of war with headlines,” Sroka added.

Indeed, the indexes were up earlier in the session on news than an inexpensive, common steroid called dexamethasone can help save critically ill COVID-19 patients, according to a clinical trial in Britain, a development that prompted the World Health Organization to update its treatment guidelines.

U.S. Federal Reserve Chair Jerome Powell is due to wrap up two days of congressional testimony, during which he pledged the central bank will use its “full range of tools” to help that recovery along. But Powell added, “It would be a concern if Congress were to pull back on the support that it’s providing, too quickly.”

On the economic front, while housing starts increased at a slower-than-expected pace in May, building permits saw a more robust rebound and applications for loans to purchase homes surged last week to a near 11-1/2-year high last week, according to separate reports from the U.S. Commerce Department and the Mortgage Bankers Association.

Unofficially, the Dow Jones Industrial Average fell 177.24 points, or 0.67%, to 26,112.74, the S&P 500 lost 11.12 points, or 0.36%, to 3,113.62 and the Nasdaq Composite added 14.41 points, or 0.15%, to 9,910.28.

Oracle Corp dropped after reporting weaker-than-expected quarterly revenues as lockdowns led its clients to delay purchases.

Travel-related companies, battered particularly hard by shutdowns, with the S&P 1500 Airline index closing well in negative territory.

Cruise operator Norwegian Cruise Line Holdings Ltd extended the suspension of its voyages through September, sending its shares sliding, along with those of peers Carnival Corp and Royal Caribbean Cruises Ltd.

Trading in Hertz Global Holdings’ shares were halted as the U.S. Securities and Exchange Commission told the bankrupt car rental firm it has problems with its new share issuance, the agency’s Chairman Jay Clayton told CNBC.

Reporting by Stephen Culp; Editing by Cynthia Osterman

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