Dow Falls 400 Points Amid Lingering Coronavirus And Economic Fears

The stock market finished lower on Tuesday, cutting a five-day winning streak, as investors worry that surging coronavirus cases across the country could derail an economic recovery.

 

The Dow Jones Industrial Average was down 1.5%, nearly 400 points, on Tuesday, while the S&P 500 fell 1.1% and the tech-heavy Nasdaq Composite lost 0.9%.

 

Shares of companies that would benefit from a reopening of the economy—including airlines, cruise stocks and some retailers—moved lower as many states continue to see a spike in new coronavirus infections.

 

Stocks traded briefly off their lows on news that the U.S. government awarded biotech drugmaker Novavax a $1.6 billion contract to develop a coronavirus vaccine, sending the company’s shares 30% higher.

 

But the stock market’s gains in recent weeks have come amid a backdrop of increasing coronavirus cases across the United States: The number of hospitalizations grew by 5% or more in 23 states over the weekend.

 

Many states have now paused reopening plans and reimposed lockdown restrictions altogether, amid fears that the country will have to shut down the economy again if the acceleration of new cases continues.

 

Atlanta’s Federal Reserve President, Rahael Bostic, told the Financial Times that the U.S. economic recovery will be “bumpier” as coronavirus cases rise in many states. He warned that economic activity, which rebounded after lockdowns were first lifted, is now “leveling off.”