S&P 500, Dow slip on fear of new infection wave

(Reuters) – The S&P 500 and Dow Jones indexes retreated on Monday after last week’s rally, as investors worried about a second wave of coronavirus infections with the reopening of several economies.

Germany and South Korea reported a surge in new COVID-19 cases on Sunday, in an ominous sign for all countries beginning to lift virus lockdowns.

“That’s going to put water on the fire today,” said Gerald Sparrow, portfolio manager of the Sparrow Growth Fund in St. Louis, Missouri.

“(Still), the difference now than four months ago is that governments and health organizations have more specific plans. The big tipping point is going to be if we can’t come up with a medicine to treat the virus.”

Travel and hospitality stocks, which have been battered due to a collapse in global travel, slipped again on Monday.

The S&P 1500 airlines index declined 5.4%, while cruise operators Carnival Corp, Norwegian Cruise Line Holdings Ltd fell 3.3% and 5.9%, respectively.

Marriott International Inc shed 5.9% after the hotel operator’s quarterly profit fell short of already drastically lowered expectations as bookings plunged.

The Nasdaq, however, edged higher as gains for tech-related stocks helped it build on a rally last week where it recovered all its 2020 losses on hopes of a pickup in business activity.

The tech-heavy index is now just 7% below its February record high, but analysts have warned of another selloff as macroeconomic data gets worse, foreshadowing a deep and lasting global recession.

“We think it’s likely a stretch for investors to chase the move much higher from here,” said Eoin Murray, head of investment at Federated Hermes.

After financial markets began pricing in negative U.S. interest rates for the first time ever last week, all eyes will be on Federal Reserve Chair Jerome Powell’s outlook on the economy at a webcast event on Wednesday.

Ten of the 11 major S&P sectors were lower, with a 2.4% decline in financials weighing the most. Financials tend to lag when economic outlook darkens.

At 10:17 a.m. ET, the Dow Jones Industrial Average was down 249.54 points, or 1.03%, at 24,081.78, the S&P 500 was down 19.98 points, or 0.68%, at 2,909.82.

The Nasdaq Composite was up 0.17 points at 9,121.49.

Drug distributor Cardinal Health Inc jumped 6.9% as the pandemic drove a surge in third-quarter sales, which topped market estimates.

Athletic apparel maker Under Armour Inc slumped 11.6% after reporting its quarterly revenue fell by 23%, while General Mills Inc rose 1.5% after it said it expects to surpass its own expectations for fiscal 2020 organic sales.

Declining issues outnumbered advancers more than 3-to-1 on the NYSE and matched advancers on the Nasdaq.

The S&P index recorded nine new 52-week highs and one new low while the Nasdaq recorded 56 new highs and four new lows.

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