US close: Stocks record heavy losses amid rise in number of new Covid-19 cases
Wall Street stocks closed sharply lower on Wednesday as market participants digested trade rumours and an ever-increasing number of new Covid-19 cases.
At the close, the Dow Jones Industrial Average was down 2.72% at 25,445.94, while the S&P 500 was 2.59% weaker at 3,050.33 and the Nasdaq Composite saw out the session 2.19% softer at 9,909.17.
The Dow Jones closed 710.16 points lower on Wednesday, reversing gains recorded in the previous session as, despite comments made by White House trade advisor Peter Navarro that initially indicated that the US-China phase one trade deal was "over", the Nasdaq Composite notched a new record high.
Market participants were also keeping a keen eye on trade news between the US and the EU after a report from Bloomberg suggested that Washington was planning to slap £3.1bn worth of tariffs on various exports from the UK, France, Germany and Spain - including olives, beer, gin and trucks. The report comes just a day after Navarro's comments that the US-China trade deal was "over" sent a shockwave across the Street.
Focus was also firmly on increased numbers of new Covid-19 cases across the States, with the health side of things back front-and-centre on investors' minds what with monetary and fiscal liquidity already seen as being factored into markets for the short-term.
Data from Johns Hopkins University revealed that the US seven-day average of coronavirus cases had surged more than 30% week-on-week after the total number of cases grew more than 31,000 on Monday.
In terms of macro data, total mortgage application volume fell 8.7% last week, according to the Mortgage Bankers Association.
However, homebuyer mortgage applications have now surged for five consecutive weeks, due to pent-up demand from March and April and a coronavirus-induced desire by more consumers to find more space and escape urban apartments
Also on housing data, the Federal Housing Finance Agency's monthly Us housing price index rose 0.2% month-on-month and 5.5% year-on-year in April.
Elsewhere, Federal Reserve head Charles Evans said recurring Covid-19 outbreaks would likely stifle economic growth and leave unemployment at elevated levels for years to come.
"My forecast assumes growth is held back by the response to intermittent localised outbreaks - which might be made worse by the faster-than-expected reopenings," Evans said.
On a slightly different note, St Louis Federal Reserve president James Bullard said the United States needed a "structural" response to the lack of Black economic progress, citing the ten-to-one gap in wealth between white and black Americans.