U.S. equities tumbled to register the worst session of the month as new COVID-19 cases in the U.S. rebounded to highs not seen since the peak of the outbreak, raising fresh doubts about the strength and longevity of an economic recovery.
|I:DJI||DOW JONES AVERAGES||35490.69||-266.19||-0.74%|
|I:COMP||NASDAQ COMPOSITE INDEX||15235.837734||+0.12||+0.00%|
The Dow Jones Industrial Average dropped over 710 points or 2.7 percent. The broader S&P 500 tumbled 2.59 percent, with a decline in all 11 sectors and energy faring the worst, while the tech-heavy Nasdaq Composite fell 2.19 percent, coming off its record high.
Oil tumbled nearly 6 percent to close at $38.01 per barrel.
The country reported 34,700 new cases of the virus on Tuesday as cases surged in states that reopened early from lockdowns intended to curb the disease's spread. Higher numbers have been reported on only two other days: April 9 and April 24, when a record 36,400 cases were logged.
Wednesday afternoon Apple disclosed it was temporarily closing stores in Houston, Texas due to the resurgence of the virus.
Additionally, the iPhone maker was under pressure after wire services cited a report in Politico on a potential investigation of its App Store by the U.S. Department of Justice and state attorneys general.
Social media giant Facebook, meanwhile, risks losing advertising from ice-cream maker Ben & Jerry's as companies ramp up pressure over misinformation and hate speech on the platform and its competitors, the Wall Street Journal reported.
The pandemic has taken a greater toll on the global economy than predicted, the International Monetary Fund -- an alliance of nations formed after World War II to foster financial stability -- warned in an assessment of the economic outlook published Wednesday.
"In most recessions, consumers dig into their savings or rely on social safety nets and family support to smooth spending, and consumption is affected relatively less than investment. But this time, consumption and services output have also dropped markedly," the IMF said. "The steep decline in activity comes with a catastrophic hit to the global labor market."
Worldwide, the economy is likely to shrink 4.9 percent this year, worse than the contraction of 3 percent predicted in April, and advanced economies such as the U.S. will take the greatest hit, the IMF said.
Before this week, "markets had looked past all the economic distress, looking into 2021 and 2022, suggesting that with all of the fiscal stimulus that we're getting from both Treasury and the Federal Reserve that that was going to quickly take the place of this health crisis that decimated 2020 earnings," Wayne Wicker, who oversees more than $28 billion in retirement funds for ICMA-RC, told FOX Business.
The spike in cases, however, has "given people pause that, potentially, they may have to rethink their case of how quickly that acceleration is going to happen," he said.
The new coronavirus data came just a day after Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, told a House committee that the next few weeks may be critical in combatting a spike in states such as Arizona and North Carolina as businesses and recreational gathering spots nationwide resume operations.
"Getting back to normality is going to be a step-by-step process and not throwing caution to the wind," he said. "Plan A, don't go into a crowd. Plan B, if you do, make sure you wear a mask."
In the metropolitan Northeast, the governors of New York, New Jersey and Connecticut responded Wednesday with an announcement that visitors from states with rising COVID infection rates would have to isolate themselves for 14 days upon arrival. They identified Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Washington, Utah and Texas.
|RCL||ROYAL CARIBBEAN GROUP||83.49||-0.93||-1.10%|
Travel-related stocks, already pummeled by months of shelter-in-place orders that curbed trips, plunged afterward as investors dumped shares in airlines such as United Continental, hotel giants like Marriott and cruise lines including Royal Caribbean.
|UAL||UNITED AIRLINES HOLDINGS, INC.||45.82||-0.97||-2.07%|
|DAL||DELTA AIR LINES, INC.||39.07||-0.64||-1.61%|
|MAR||MARRIOTT INTERNATIONAL, INC.||159.80||+3.76||+2.41%|
In the healthcare sector, hospital operators such as HCA Healthcare and Community Health Systems were under pressure after a federal judge ruled in favor of a Trump administration plan requiring them to disclose the actual costs of routine tests and procedures, an initiative meant to lower prices for patients. An appeal is planned.
|HCA||HCA HEALTHCARE, INC.||245.56||+4.04||+1.67%|
|CYH||COMMUNITY HEALTH SYSTEMS, INC.||10.11||+0.06||+0.60%|
In transportation, Fiat Chrysler and General Motors, two of the Big 3 U.S. automakers, were ordered by a federal judge to meet and settle a lawsuit over whether one company got a competitive edge when union leaders were showered with cash and other perks.
GM has accused Fiat Chrysler of racketeering, saying the rival won labor concessions during contract talks because United Auto Workers officials were bribed with money from a job training center.
|GM||GENERAL MOTORS CO.||54.39||-2.89||-5.05%|
U.S. District Judge Paul Borman ordered GM chief executive Mary Barra and her Fiat Chrysler counterpart, Mike Manley, to meet in person by July 1 “to reach a sensible resolution of this huge legal distraction."
Electric-car maker Tesla, meanwhile, is facing scrutiny from the National Highway Traffic Safety Administration over reports that the giant touch screens in its vehicles are subject to failure; the agency cited complaints about Model S vehicles sold from 2012 to 2015.
The S&P 500's energy sector plunged with high-profile companies from ExxonMobil to Chevron and Phillips 66 taking a beating.
|XOM||EXXON MOBIL CORP.||64.12||-1.74||-2.64%|
The industry has suffered a supply glut this year after a price war between Saudi Arabia and Russia that was followed by a slide in global travel due to COVID-19.
Gold dropped 0.4 percent to $1,774 an ounce.
Equity markets were lower across the board in Europe, with Britain's FTSE falling 3.11 percent, France's CAC 40 sliding 2.92 percent and Germany's DAX down 3.43 percent.
In Asia, China's Shanghai Composite rose 0.3 percent, while Japan's benchmark Nikkei and Hong Kong's Hang Seng dropped 0.07 percent and 0.5 percent, respectively.
The Associated Press contributed to this article.