The S&P 500 and Dow Jones indexes have retreated after last week’s rally, as investors worry about a second wave of coronavirus infections with the reopening of several economies.
Germany and South Korea reported a surge in new COVID-19 cases on Sunday, in an ominous sign for all countries beginning to lift virus lockdowns.
Gerald Sparrow, portfolio manager of the Sparrow Growth Fund in St Louis, Missouri, said investors would tread carefully.
“That’s going to put water on the fire today,” he said of the reports.
“(Still), the difference now than four months ago is that governments and health organisations have more specific plans. The big tipping point is going to be if we can’t come up with a medicine to treat the virus.”
Travel and hospitality stocks, which have been battered due to a collapse in global travel, slipped again on Monday.
The S&P 1500 airlines index declined 5.4 per cent, while cruise operators Carnival and Norwegian Cruise Line fell 3.3 per cent and 5.9 per cent, respectively.
Marriott International shed 5.9 per cent after the hotel operator’s quarterly profit fell short of already drastically lowered expectations as bookings plunged.
The Nasdaq, however, edged higher as gains for tech-related stocks helped it build on a rally last week where it recovered all its 2020 losses on hopes of a pickup in business activity.
The tech-heavy index is now just seven per cent below its February record high, but analysts have warned of another sell-off as macroeconomic data gets worse, foreshadowing a deep and lasting global recession.
“We think it’s likely a stretch for investors to chase the move much higher from here,” Federated Hermes head of investment Eoin Murray said.
After financial markets began pricing in negative US interest rates for the first time ever last week, all eyes will be on Federal Reserve Chair Jerome Powell’s outlook on the economy at a webcast event on Wednesday.
Ten of the 11 major S&P sectors were lower on Monday, with a 2.4 per cent decline in financials weighing the most. Financials tend to lag when economic outlook darkens.
At 10.17am local time, the Dow Jones Industrial Average was down 249.54 points, or 1.03 per cent, at 24,081.78, the S&P 500 was down 19.98 points, or 0.68 per cent, at 2,909.82.
The Nasdaq Composite was up 0.17 points at 9,121.49.
Drug distributor Cardinal Health jumped 6.9 per cent as the pandemic drove a surge in third-quarter sales, which topped market estimates.
Athletic apparel maker Under Armour slumped 11.6 per cent after reporting its quarterly revenue fell by 23 per cent, while General Mills rose 1.5 per cent after it said it expects to surpass its own expectations for fiscal 2020 organic sales.
Declining issues outnumbered advancers more than 3-to-1 on the NYSE and matched advancers on the Nasdaq.
The S&P index recorded nine new 52-week highs and one new low while the Nasdaq recorded 56 new highs and four new lows.