The Dow Jones Industrial Average fell sharply on Thursday, erasing its gains for the week, amid renewed concerns over the coronavirus and its impact on the economy.
The 30-stock average dropped 400 points, or 1.5%. The S&P 500 slid 0.9%. Thursday’s decline put the Dow 0.5% lower week to date. The Nasdaq Composite recovered from an earlier decline to trade just above the flatline.
Walgreens was the biggest laggard in the Dow, dropping nearly 10% on weaker-than-expected earnings for the previous quarter. Walgreens also suspended a share repurchase program. Boeing also fell more than 3%.
Shares of companies that would benefit from the economy reopening struggled. United Airlines, Delta and American all fell more than 4%. Carnival Corp dropped 2.5% and Royal Caribbean slid 5.5%. Kohl’s declined by 6.8%.
Stocks hit their lows of the day after Florida reported a record in coronavirus-related hospitalizations. The state also reported a record spike in Covid deaths. Stocks recovered slightly, however, after Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Moderna’s coronavirus vaccine candidate will likely enter phase 3 of trials by the end of July.
“There’s less reason for optimism now than there was in April,” said Jason Thomas, chief economist at AssetMark. “In April, we had a view on how long it would take to get a vaccine, and there was the possibility that we could open the country in stages and see a sustainable recovery.”
“We’re still looking at a vaccine sometime early next year, but it’s become clear that it’ll be very difficult to open without causing a renewed surge” in coronavirus cases, Thomas added.
Gains in some of the biggest tech-related names capped the losses Thursday. Amazon rose 1.2% to an all-time high. Alphabet, Microsoft and Apple were up slightly. These stocks have outperformed this week as investors grow concerned the recent global coronavirus spikes could prolong the current economic downturn and force people to stay home for longer.
“A lot of these names are benefiting from the at-home play,” said Douglas Busch, founder of ChartSmarter. Busch noted that, from a technical perspective, he’d like to see consolidation in some of the major tech stocks but thinks they have further upside moving forward.
More than 3 million coronavirus cases have been confirmed in the U.S. alone, according to Johns Hopkins University. Globally, over 12 million cases have been confirmed.
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