Wall Street’s major indexes have fallen as investors weigh the risk to the domestic economy from rising coronavirus cases and a worsening forecast of the damage from the pandemic.

The US state of Washington made face masks mandatory in public places while many other states registered a record number of cases, including Arizona and Texas, where restrictions meant to slow the spread of the disease were lifted early.

The top US infectious disease official Anthony Fauci has said the next two weeks could be critical in containing the outbreak.

The International Monetary Fund said the pandemic was causing wider and deeper damage to economic activity than first thought, and it slashed a forecast for a contraction in global output to 4.9 per cent from 3.0 per cent.

Advanced economies have been particularly hard hit, with US output now expected to shrink 8.0 per cent, more than 2 percentage points worse than the April forecast.

“The rising number of coronavirus cases we’re continuing to see in the United States is a major concern despite the Trump administration’s previous refusal to lockdown the economy again,” said Craig Erlam, market analyst at OANDA in London.

“There will be significant resistance to restrictions being reimposed, but the fear is that they are left with no other option.”

A slate of better-than-feared economic reports, easing lockdowns and massive stimulus measures have powered the Nasdaq to an all-time high and put the benchmark S&P 500 on track for its best quarterly performance since 1975.

The S&P 500 and Dow Jones Industrials are just about 7.0 per cent and 11.5 per cent from their respective February record closing highs.

In early trading on Wednesday, the Dow Jones Industrial Average was down 385.20 points, or 1.47 per cent, at 25,770.90, the S&P 500 was down 41.54 points, or 1.33 per cent, at 3,089.75, and the Nasdaq Composite was down 109.97 points, or 1.09 per cent, at 10,021.40.

Battered US airlines, resorts and cruise operators fell again, with the S&P 1500 airlines index down 4.4 per cent and Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd off more than 9.0 per cent.

Carnival Corp also declined 9.0 per cent as ratings agency Standard & Poor’s downgraded its bonds to junk status, forecasting continued weak demand for the cruise industry.

Bank stocks, which tend to outperform when the outlook for the economy improves, slipped about 2.9 per cent.

On the other hand, Dell Technologies Inc jumped 7.3 per cent after a report said the company was considering spinning off its roughly $US50 billion ($A73 billion) stake in cloud computing software maker VMware Inc. VMware advanced 4.1 per cent

Declining issues outnumbered advancers more than 6-to-1 on the NYSE and 4-to-1 on the Nasdaq.

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded 30 new highs and four new lows.

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