Wall St drops on trade war fears, economic worries

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(Reuters) – Wall Street’s main indexes were lower in choppy trading on Thursday, as renewed worries about Sino-U.S. trade relations added to fears of an extended economic downturn due to the virus outbreak.

FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, U.S., April 26, 2020. REUTERS/Jeenah Moon

President Donald Trump said he was very disappointed with China over its failure to contain the novel coronavirus, saying the worldwide pandemic cast a pall over his U.S.-China trade deal.

This further rattled markets after Federal Reserve Chairman Jerome Powell’s somber outlook on the economy and U.S. infectious disease expert Anthony Fauci’s warning that the virus was not yet under control.

“Markets are repricing the risk around economic reopening and the eventual economic normalization. There’s an understanding that the timetable may be longer than we initially thought,” said Yousef Abbasi, global market strategist at INTL FCStone.

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Wall Street’s fear gauge, the CBOE volatility index rose for the third straight day, hovering near a 10-day high. The three main stock indexes were headed for a third straight day of losses.

Market participants said a rally in bank stocks helped Wall Street indexes come off intraday lows. Wells Fargo & Co surged 6.1% as it bounced back from 11-year lows.

“Wells Fargo has brought the entire market with it,” said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas. “I think they are oversold. The markets like that the banks are showing some life.”

Economic readings continued to reflect the pain caused by the pandemic, as data showed 2.98 million Americans filed for state unemployment benefits last week, higher than economists’ estimates.

The focus now turns to retail sales data on Friday that will show the impact of stay-at-home orders on the U.S. consumer in April.

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At 11:55 a.m. ET, the Dow Jones Industrial Average was down 55.31 points, or 0.24%, at 23,192.66, the S&P 500 was down 14.69 points, or 0.52%, at 2,805.31. The Nasdaq Composite was down 70.98 points, or 0.80%, at 8,792.19.

Beaten-down travel stocks tumbled again with the S&P 1500 airlines index down 8% and hotel operator Marriott International Inc off 1.2%.

Norwegian Cruise Line Holdings Ltd shed 1.6% as it swung to a quarterly loss.

Cisco Systems Inc rose 5.0% after beating quarterly revenue and profit estimates, as lockdowns globally boosted demand for its remote-work tools and networking equipment.

Declining issues outnumbered advancers for a 2.85-to-1 ratio on the NYSE and a 2.75-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and 16 new lows, while the Nasdaq recorded 12 new highs and 108 new lows.

Reporting by Medha Singh and Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta

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