Economic news

Wall Street Closes Lower as Virus Spike Hits Travel Stocks

NEW YORK, April 20 (Reuters) - Stocks on Wall Street fell for a second straight day on Tuesday as a global spike in coronavirus cases hit travel-related shares and investors had second thoughts about big U.S. banks’ apparently stellar earnings last week.

Kansas City Southern surged on the prospect of a bidding war after Canadian National offered about $30 billion for the U.S. railroad, some $5 billion more than an earlier offer from Canadian Pacific.

Boeing Co slid on the unexpected departure of its finance chief, the latest shock to hit the planemaker as it fights to recover from the pandemic and 737 MAX crisis.

Investors piled into defensive sectors considered relatively safe during times of economic uncertainty, lifting real estate , utilities, consumer staples and healthcare as financials and energy shares fell hard.

Shares of airline operators and cruiseliners including JetBlue Airways, American Airlines, Norwegian Cruise Line and Carnival Corp, which were hammered last year during lockdowns but have climbed recently on the reopening hopes, fell around 5%.

Some of the recent optimism about the leisure industry has waned as the reopening might take a bit longer than initially thought, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“We’re not out of the woods yet when it comes to the COVID virus and getting to where global economies are reopening,” he said. “Some of that enthusiasm has diminished.”

A leading epidemiologist at the World Health Organization said on Monday the latest rise in COVID-19 infections worldwide reflected increases among all age groups.

Wall Street scaled record highs last week as investors bet on stocks such as industrials and miners that are seen as benefiting from the economic rebound, while highly valued technology stocks regained favor after a retreat in bond yields.

Unofficially, the Dow Jones Industrial Average fell 0.75% to end at 33,820.51 points, while the S&P 500 lost 0.68% to 4,134.96.

The Nasdaq Composite dropped 0.92% to 13,786.27.

The CBOE volatility index, known as Wall Street’s fear gauge, climbed above 19 points for the first time since March 31, but closed a bit below that.

JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc and Wells Fargo & Co led financials lower as analysts reassessed their earnings reports, said Dick Bove, senior research analyst at Odeon Capital Group.

Accounting changes on how to report loan reserves skewered numbers when compared to a year ago, he said.

“People made the assumption this was a gangbusters quarter for the banking industry when that’s far from the truth,” Bove said, adding second-half profits are expected to be very strong.

United Airlines Holdings Inc was the largest decliner on the S&P 500 after reporting a bigger-than-expected adjusted net loss to push the S&P 1500 airline index down.

Shares of video-streaming service provider Netflix Inc , which thrived during last year’s lockdowns, fell ahead of its results due after the closing bell.

International Business Machines Corp rose after recording the biggest increase in quarterly sales in more than two years.

Analysts expect first-quarter earnings from S&P 500 firms to jump 31.5% from a year earlier, according to Refinitiv IBES data.

(Reporting by Shivani Kumaresan and Medha Singh in Bengaluru; Editing by Sriraj Kalluvila, Anil D’Silva and Arun Koyyur and Richard Chang)

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree