By Medha Singh and Devik Jain
(Reuters) – Wall Street’s three major indexes tumbled on Wednesday as investors weighed the risk to domestic economy from rising coronavirus cases and a worsening forecast of the damage from the pandemic.
Washington state made face masks mandatory in public places, while many other U.S. states saw record cases, including Arizona and Texas, where restrictions meant to slow the spread of the disease were lifted early.
The top U.S. 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, prompting it to slash its 2020 global output forecasts further to 4.9% from 3.0%.
Advanced economies have been particularly hard hit, with U.S. output now expected to shrink 8.0%, more than 2 percentage points worse than the April forecast.
“People are feeling incrementally negative about new coronavirus cases both in the United States and the world. It’s the summer and in fall we have the flu and with the COVID-19 going on it’s a significant concern,” said Elliot Savage, portfolio manager of the YCG Enhanced Fund.
Wall Street’s fear gauge, the CBOE volatility index (), rose 3.4 points to 34.74.
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 8% and 13% from their respective February record closing highs.
At 10:58 a.m. ET, the Dow Jones Industrial Average () was down 511.17 points, or 1.95%, at 25,644.93, the S&P 500 () was down 55.89 points, or 1.78%, at 3,075.40. The Nasdaq Composite () was down 136.26 points, or 1.34%, at 9,995.11.
Battered U.S. airlines, resorts and cruise operators fell again, with the S&P 1500 airlines index down 5.1%. Royal Caribbean Cruises Ltd (N:) slided 9.5% and Norwegian Cruise Line Holdings Ltd (N:) 10.3%.
Carnival Corp (N:) also declined 9.3% as ratings agency Standard & Poor’s downgraded its bonds to junk status, forecasting continued weak demand for the cruise industry.
Bank stocks <.spxbk>, which tend to outperform when the outlook for the economy improves, slipped about 2.9%.
On the other hand, Dell Technologies Inc (N:) jumped 7.4% after a report said the company was considering spinning off its roughly $50 billion stake in cloud computing software maker VMware Inc (N:). VMware advanced 3.2%.
Declining issues outnumbered advancers for a 7.50-to-1 ratio on the NYSE and for a 4.78-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week highs and no new lows, while the Nasdaq recorded 34 new highs and four new lows.