Dow Snaps Two-Week Win Streak as Rising Cases Trigger Recovery Worries By Investing.com


© Reuters.

By Yasin Ebrahim

Investing.com – The Dow fell Friday, sapping a two-week win streak as a record surge in Covid-19 cases threatening the economic outlook prompted investors to abandon their bullish bets on stocks. 

The fell 0.75%, or 219 points. The was down 0.69%, while the slipped 0.42 %.

The relentless surge in Covid-19 cases is likely to dent the economic recovery as parts of the U.S. impose restrictions to curb the virus at a time when a lack of stimulus will keep a lid on consumer spending. 

{0|JPMorgan}} cut its fourth-quarter 2020 estimate to 2.5% from 3.5% and its first-quarter 2021 growth forecast to 2% from 2.5%, citing an “immediate impact” on household incomes from a lack of stimulus.  

The worries over the recovery were exacerbated by data showing cases reached another daily high Thursday with 185,759 new infections, and a surprise move from U.S. Treasury Secretary Steven Mnuchin not to extend key lending programs.  

The Treasury Secretary said the programs “have clearly achieved their objectives,” but analysts questioned the timing of the move as Covid-19 cases continue to surge.

“(D)epending on the depth and duration of the second-round resurgence and the subsequent policy response, the U.S. economy could slow significantly or potentially fall back into negative territory, creating a second-round recession,” Stifel said in a note.

Against the growing backdrop of worries about the recovery, industrials, energy, and financials slipped, dragging the broader market deeper into the red.

Financials were hurt by regional banks, with W. R. Berkley (NYSE:), Citizens Financial Group (NYSE:) and Regions Financial (NYSE:) down about 2%. A slip in U.S. Treasury yields, with the  falling 2%, exacerbated weakness in banks.

Energy, meanwhile, shrugged off firmer oil prices, paced by a decline in Devon Energy (NYSE:) and Marathon Oil (NYSE:).

Elsewhere, stay-at-home stocks like Peloton Interactive (NASDAQ:) and Zoom Video Communications (NASDAQ:) rose, with the latter up more than 6% as investors bet that further restrictions will keep demand elevated.

On the vaccine front, Pfizer (NYSE:) rose 1.4% after confirming it would apply on Friday for emergency use authorization for its Covid-19 vaccine. The U.S. Food and Drug Administration is expected to review the request in the coming weeks, and the vaccine, if approved, is expected to be rolled out before year-end.

In other news, Boeing (NYSE:) was down 3% even as reports suggested the 737 Max is nearing approval in Europe.  

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