Fear of a second wave of corona infections has returned to the US stock markets and the Dow Jones Industrial Average (INDEXDJX:.DJI) on Friday temporarily went below the 25,000 mark. Economic data also dampened sentiment. With a discount of 2.84 percent to 25,015.55 points, the world’s best-known stock market barometer ultimately went out of trading. The weekly loss adds up to 3.3 percent. The level of 27,580 points recaptured in an impressive rally in early June moved a little further into the distance.
The broad S&P 500 (INDEXSP:INX) lost 2.42 percent on Friday to 3009.05 points. The Nasdaq 100 (INDEXNASDAQ: NDX) fell 2.50 percent to 9,849.35 points after the technology-heavy index hit a record high on Tuesday due to hopes that the valley for the global economy will not be quite as deep in view of the extensive aid packages and the increasing loosening of virus-related restrictions in the individual countries.
In the meantime, however, the fear of corona is present again. With around 40,000 reported cases, the number of new infections in the USA reached a new high on Thursday. This is the previous record of around 36,400 new infections on April 24th, according to figures from Johns Hopkins University. Just two weeks ago, the number of infections reported daily was slightly more than half the value from Thursday, and the data was mixed on the economic cycle. Consumer spending recovered strongly in May, but not quite as good as expected. The consumer confidence surveyed by the University of Michigan for June was also somewhat disappointing.
Market analyst Edward Moya of broker Oanda sees a growing risk that the US economy will not recover quite as quickly as has been signaled by previous economic data after the gradual easing. In particular, new, at least regional, lockdowns could slow down a V-shaped recovery. It was on this very day that the governor of Texas ordered bars and pubs to be closed because of the corona dangers.
The bet on a rapid revival of the economy plus stimulus from central banks and governments had recently been the most important driver of price recovery on the stock exchanges.
Among the sectors, the focus was on the banking sector on Friday: After the major banks’ shares had risen significantly the previous day due to the relaxation of some corona restrictions, the US central bank’s stress test started to decline from the previous evening. The Fed waved through all the banks and issued a very positive testimony, but it did impose conditions: To protect its capital resources, the largest banks must not increase dividends or buy back their own shares at least until the end of the third quarter.
Goldman Sachs’ shares were in the Dow Taillight with minus 8.7 percent, JPMorgan followed in third place with minus 5.5 percent. Morgan Stanley’s papers also suffered in the S&P 100, the Bank of New York Mellon , U.S. Bancorp , the Citigroup , the Bank of America and Wells Fargo up to 7.4 percent.
For the Nike (NYSE:NKE) share certificates the Dow declined 7.6 percent after the quarterly figures released the previous evening. The sporting goods manufacturer had posted a quarterly loss of more than three-quarters of a billion US dollars due to the corona pandemic.
Twitter also posted substantial losses with minus 7.4 percent and Facebook at minus 8.3 percent, although Facebook shares had only reached a record high on Tuesday. The consumer goods giant Unilever and the car maker Honda announced on Friday that they would no longer advertise in the U-S. through FB and its subsidiary Instagram. A boycott campaign against the platform that started last week is gaining significant popularity due to its controversial handling of racist, inflammatory and manipulative content.