June 24, 2020 / 4:40 PM / 21 days ago

Instant View: Wall Street backpedals amid new virus fears, quarantines

NEW YORK (Reuters) - Wall Street’s main indexes tumbled on Wednesday, accelerating pullbacks a day after the Nasdaq notched a record high, after New York, New Jersey and Connecticut announced that visitors from states with high coronavirus infection rates must self quarantine.

FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid

Those states are Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Texas, Utah and Washington, New York Governor Andrew Cuomo told reporters.

The S&P 500 .SPX was briefly down about 3% and was last off 2.6%. The Dow Jones Industrial average .DJI was off 2.6% and the Nasdaq off 2.33%, after posting its fifth closing record this month on Tuesday.

COMMENTS:

OLIVER PURSCHE, PRESIDENT, BRONSON MEADOWS CAPITAL MANAGEMENT, FAIRFIELD, CONNECTICUT

“I felt that markets were pricing in too much perfection for the past couple of weeks. We were overbought both on a technical and a fundamental level. I’m not surprised by this (sell-off), especially with the news that came out that New York, New Jersey and Connecticut would be putting in a 14-day quarantine for anybody traveling from (coronavirus) hotspots. I think you’re going to see more news like that, and unfortunately, I think that’s going to translate into shock to the people that have been overly optimistic about how this is going to play out. Even if you look at yesterday – gold hitting a multi-year high, the 10-year treasury yield being at 0.7% and the dollar selling – they’re not bullish signs for U.S. stock markets.”

THOMAS SIMONS, MONEY MARKET ECONOMIST, JEFFERIES LLC, NEW YORK

“It’s this kind of slow realization that we’re not going to see a straight-line improvement coming out of the lockdown phase of the virus.”

“Maybe a month ago we started to see strong economic data as the lockdown orders were being lifted, and the expectation was that things were going to go swimmingly.  Now we’re starting to see scary headlines from certain places again like a Houston-area ICU full and Florida reporting a steep acceleration in cases.”

“I don’t think we’re headed toward broad lockdown orders and I don’t think that is the expectation on consensus either. But even if that isn’t true you’re still not going to see stronger economic activity either. Even if it isn’t mandated by the government to stay home, people aren’t going to be comfortable going out. They’re not going to be out and about shopping.”

BRIAN BATTLE, DIRECTOR OF TRADING, PERFORMANCE TRUST CAPITAL PARTNERS,CHICAGO

“It’s the persistent headlines of increasing virus numbers with Texas and Arizona reporting more it seems this story might be coming back. A week ago everything was great. The economy was opening up the unemployment number came in as a surprise. 

“We’re getting a little more bad news creeping in to the market that we hadn’t priced in. We thought we were past this ... it’s not unwarranted but it’s definitely a reaction to the headlines.”

“The story has been percolating for the past couple of days and it seems like capitulation. This isn’t just Arizona. This isn’t just Texas. Maybe this is a national thing.”

“The stock market doesn’t care if it’s a problem in Arizona but the market cares if it’s a national problem. The theme seems to be coming that it’s a national problem.”

“If New York, New Jersey and Connecticut have a 14-day quarantine for incoming non-residents, that makes it look like it’s that much more serious. The policy response makes it look like it’s that much more serious.”

“All this week we’ve been hearing how it’s going to get worse. The facts seem to be supporting that narrative. We’ve ignored it for the past couple of days. We gave it up today.”

“I believe this market effect will be transitory.”

“At the margins maybe this is getting worse but it’s getting a little worse ... Are we back to a disaster again? No. We know a lot more than we knew in March and April.”

“These headlines will pass because people will remember it’s not as bad as it was in April.”

Compiled by Alden Bentley

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