U.S. stocks tumble, Europe wavers as coronavirus advances

NEW YORK, USA – Wall Street stocks suffered their second rout in 3 sessions on Friday, June 26, as surging coronavirus cases prompted large US states to impose new public health restrictions, threatening the economy’s recovery from widespread business shutdowns.

Major US indices fell around 2.5% or more to finish the week in the red after Texas and Florida ordered bars to stop serving alcohol on site, along with other measures intended to halt a huge jump in virus cases.

Earlier, European bourses finished mostly lower, while oil prices fell on worries about weakening demand.

Investor confidence in a US economic recovery is “being stymied by lingering COVID-19 concerns as new cases persist,” said analysts at the Charles Schwab brokerage.

Texas and Florida are two of the most populous states in the country and together home to 50 million people. Other southern and western states, including Arizona and Georgia, have also seen big jumps in cases.

“We are facing a serious problem in certain areas,” top infectious disease expert Anthony Fauci said on Friday as the Trump administration’s coronavirus task force held its first public briefing in two months.

Stocks have been volatile this week as investors try to assess the implications of the current phase of the coronavirus crisis and whether it will be as devastating to the economy as the shutdowns earlier this year.

“A big portion of the rally that equities enjoyed between late March and early June was down to the chatter that lockdown restrictions will be eased, and then they were eased, so now there are fears the process could be reversed,” said CMC Markets UK analyst David Madden. 

But there were other significant factors in Friday’s rout on Wall Street, which pushed all 3 major indices into the red for the week. 

Large banks including Bank of America and Goldman Sachs fell more than 6% after the Federal Reserve late Thursday, June 25, ordered the industry to suspend buybacks and limit dividend payments amid uncertainty over the coronavirus.

Facebook dove 8.3% as it faced a widening boycott from major advertisers due to criticism it has not done enough to crack down on hate speech and incitements to violence.

After Unilever joined Verizon among the large companies suspending spending on the platform, chief executive Mark Zuckerberg said Facebook would ban a “wider category of hateful content.” – Rappler.com