Flare ups of COVID-19 cases in the U.S. have delivered a fresh gut check to bulls on Wall Street, following an unprecedented market rebound from a coronavirus-ignited downturn back in March.
Cases in the South and West of the U.S. have accelerated and threaten to reverse, or stall, plans to reopen economies nearly frozen for months to limit the spread of the deadly contagion. Over the past several days, hospitalizations and infections have been resurgent in places like California, with more than 7,000 new cases, as of Tuesday, and in Arizona where identified infections jumped nearly 50% from a week earlier, representing the largest increase by any U.S. state, The Wall Street Journal reported.
Nearly 48% of all positive cases have been among people between the ages of 22-44, the paper reported.
While the ramp-up in infections may not represent a “second wave”—experts say we are still in the first wave in the U.S.—the equity market on Wednesday suffered its biggest selloff since June 11, with the Dow Jones Industrial Average
the S&P 500 index
ending the session at least 2.6% lower and the Nasdaq Composite Index
snapping an eight-day win streak.
Over the course of this pandemic, market experts have morphed into armchair epidemiologist, who find themselves forced to assess the implications of the rising tide of infections here and elsewhere around the globe. Thomas Lee, head of Fundstrat Global Advisors, in a research report dated June 23, said that the biggest implications were of policy.
“This raises many questions but the most important is the policy direction. Given the surge in COVID-19 cases, states and the US need to mitigate transmission—aka, course correct,” wrote Lee.
Thirty-three states on Tuesday record a seven-day average of new cases that was higher than their average during the past two weeks, according to The Wall Street Journal’s analysis of data aggregated by Johns Hopkins University.
Ironically, elevated infections and hospitalizations in clusters across America, compelled New York—formerly an epicenter of the global pandemic—to instate a quarantine of travelers visiting from Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Washington, Utah and Texas. New York is rolling out the 14-day quarantine protocol in coordination Connecticut and New Jersey, states that also have seen cases stabilize in recent weeks.
Lee wrote that one of the fears for investors is that the jump in infections will force a broader reinstatement of stay-at-home orders, which are viewed as politically and economically unpalatable after three months of such procedures in much of the world.
“The last resort is likely reinstate shelter at…
Go to the news source: Here’s why stock-market distress over spiking coronavirus cases is intensifying