US open: Stocks sink amid spike in new coronavirus cases
By Iain Gilbert
Date: Friday 26 Jun 2020
(Sharecast News) - Wall Street stocks opened sharply lower on Friday amid rising coronavirus cases, a surprise loss from Nike and the Fed's latest bank stress-test results all weighed on sentiment.
As of 1550 BST, the Dow Jones Industrial Average was down 2.13% AT 25,198.23, while the S&P 500 was 1.82% weaker at 3,027.54 and the Nasdaq Composite came out the gate 2.01% softer at 9,815.87.
The Dow opened 547.37 points higher on Friday, reversing gains recorded yesterday amid news that regulators were set to ease some rules on banks, although ongoing worries about the risk of a second wave of Covid-19 lingered.
The moves in early trade came after the Federal Reserve's yearly stress test of major US banks revealed that several banks were likely to get close to their minimum capital requirements as a result of the coronavirus pandemic, meaning the banks would be forced to suspend share repurchase programs and keep dividend payments at current levels throughout the third quarter.
"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," said Federal Reserve vice chairman Randall Quarles.
In coronavirus headlines, Florida reported more than 5,000 new cases, while Arizona's cases jumped 5.1% - topping a seven-day average of 2.3% - and Texas governor Greg Abbott announced the state would halt its reopening plans as a result of the recent spike in cases and hospitalisations.
On the corporate front, the Fed's stress left shares in Bank of America, JPMorgan Chase, Wells Fargo and Goldman Sachs all more than 4% lower at the open, while Nike stock slid 5.5% at the bell after posting a loss of $0.51 per share in its fourth trading quarter.
In data news, personal income fell in May, declining by 4.2% month-on-month, as the effects of the White House's stimulus checks seemingly wore off, according to the Commerce Department.
However, despite the decline in income, spending picked up in May, rising 8.2% month-on-month - slightly below consensus expectations for 9.0% but still the largest one-month gain dating back to records beginning in 1959.
Elsewhere, consumer sentiment stumbled in June as Covid-19 cases started to climb again across multiple states, according to the University of Michigan. The UOM's final sentiment index fell to 78.1 from a preliminary reading of 78.9, short of expectations for a final June reading of 79.2.
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