Major US indices tumbled more than 2 percent on Friday as several US states imposed business restrictions in response to a surge in coronavirus cases.
Some US states that were spared the brunt of the initial coronavirus outbreak or moved early to lift restrictions are seeing a resurgence in new infections. On Friday, Texas and Florida ordered bars to close down again.
"You're seeing a pretty dramatic increase in cases," said Kevin Grogan, managing director of investment strategy at Buckingham Strategic Wealth in St. Louis. "If people start feeling again like it's not safe to eat out or go shopping, that could have a really negative impact on the stock market."
A Wall Street Journal report that the Phase 1 US-China trade deal could be at risk placed additional pressure on US stocks. According to that report, Chinese officials warned that "meddling" in Hong Kong and Taiwan could lead Beijing to back away from its commitment to purchase US farm goods.
"It added another log into the risk aversion fire," said Edward Moya, senior market analyst at OANDA in New York, of the report on China.
Among sectors, financial, communication services and energy shares outpaced the broader S&P 500 in declines. S&P 500 bank shares plummeted 6.1 percent after the Federal Reserve limited dividend payments and barred share repurchases until at least the fourth quarter following its annual stress test.
Renewed concerns over the novel coronavirus pandemic has threatened to derail a strong rally for Wall Street that has erased much of the S&P 500's steep losses from March. The benchmark index ended below its 200-day moving average, an indicator of long-term momentum.
The uptick in coronavirus cases likely triggered a test of that technical level, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.
The Dow Jones Industrial Average fell 2.8 percent, to 25,015, the S&P 500 lost 2.4 percent to 3,009 and the Nasdaq Composite dropped 2.6 percent to 9,757.
For the week, the S&P 500 fell 2.87 percent, the Dow lost 3.31 percent, and the Nasdaq shed 1.87percent.
Facebook shares shed 8.3 percent, weighing the most on the S&P 500, after Unilever and Verizon Communications joined an advertising boycott that called out the social media giant for not doing enough to stop hate speech on its platforms.
Nike shares dropped 7.6 percent as the footwear maker, hurt by store closures due to the pandemic, posted a surprise quarterly loss. (Reuters)