Dow falls 397 points as coronavirus concerns smother tech rally

  • US equities slumped on Tuesday, ending a five-session winning streak as soaring COVID-19 infections across the nation revived fears of a prolonged recession.
  • Facebook, Apple,Amazon, and Netflix all notched intraday record highs, but their gains failed to pull the Nasdaq composite out of a single-day loss.
  • A new report from the Organisation for Economic Cooperation and Development described the labour-market fallout from the pandemic as “far worse than” that seen during the financial crisis.
  • Economic-reopening plays including airlines and cruises tumbled.
  • Oil fell, with West Texas Intermediate crude sliding as much as 1.8%, to $US39.90 per barrel.
  • Watch major indexes update live here.

US stocks dipped on Tuesday as surging coronavirus infections sparked fresh concerns of a prolonged economic recession.

The tech mega-cap stocks that drove indexes higher on Monday failed to repeat their rally. While Facebook, Apple,Amazon, and Netflix all reached intraday record highs, the broad tech sector erased gains in the afternoon.

Here’s where US indexes stood at the 4 p.m. ET market close on Tuesday:

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A new report from the Organisation for Economic Cooperation and Development detailed the risk of a second wave of coronavirus cases. The OECD said it expected the US unemployment rate to stay elevated at 10.4% through the fourth quarter of the year.

Labour-market damage incurred from the pandemic is “far worse than” that seen during the financial crisis and requires an extension to unemployment benefits, the OECD said.

The labour-market news wasn’t all bad. US hires increased a record 2.4 million in May to an all-time high of 6.5 million, according to a Tuesday release by the Labour Department. Job openings also jumped to 5.4 million.

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, raised concerns about consumer confidence waning amid the virus resurgence. Business owners and consumers “are getting nervous again” as cases increase, and the US economic recovery could end prematurely if confidence crumbles further, he said.

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“There is a real sense that this might go on longer than we had hoped and we had expected and we had planned for,” Bostic added.

So-called economic-reopening plays fell. Royal Caribbean and Carnival declined alongside airlines including Delta,United, and American.

Novavax spiked after it said the US government awarded it $US1.6 billion for testing and manufacturing its coronavirus vaccine. The grant is the largest yet from Operation Warp Speed, the White House’s plan to rapidly develop and deliver a vaccine or treatment for COVID-19.

Elsewhere, Tesla stock reached yet another record following price-target upgrades from bearish analysts.

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Oil prices declined after staging a mild upswing in early trading. West Texas Intermediate crude slid as much as 1.8%, to $US39.90 per barrel. Brent crude, the international benchmark, fell 1.5%, to $US42.46 per barrel, at intraday lows.

Tuesday’s drop followed a strong upswing to kick off the week. US stocks soared on Monday on the back of China’s biggest single-day equities rally since 2015. Tech giants drove major indexes higher and helped the Nasdaq composite notch a record high. Amazon swung above $US3,000 per share and reached an all-time high of its own.

Now read more markets coverage from Markets Insider and Business Insider:

Stocks could fall 40% in a collapse mimicking the Great Depression, famed economist Gary Shilling says

Goldman Sachs cuts US GDP estimate, now sees economy shrinking 4.6% in 2020

Bank of America identifies 3 indicators that could make or break the stock market this summer – and warns they’re all deteriorating fast

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