US open: Stocks head south amid fears of a second spike in Covid-19 cases
Wall Street stocks headed south at the bell on Tuesday as the Dow Jones Industrials looked set to pump the breaks on its comeback rally amid heightened concerns around another spike in Covid-19 cases and trade tensions between the US and the EU.
As of 1535 BST, the Dow Jones Industrial Average was down 1.07% at 27,276.52, while the S&P 500 was 0.97% weaker at 3,201.14 and the Nasdaq Composite started out the session 0.28% softer at 9,897.40.
The Dow opened 295.92 points lower on Tuesday, all but reversing the previous session's sharp gains, which saw the S&P 500 return to positive territory for the year and the Nasdaq Composite register its first record close since 19 February.
Fears surrounding a second spike in Covid-19 cases as a result of the US economy's reopening weighed on sentiment a little at the bell, with stocks that have benefited from increased optimism, such as United Airlines, Delta Air Lines, Carbnival and Royal Caribbean, all dropping at the open.
With Monday's rally coming in the face of the National Bureau of Economic Research's declaration that the US had officially entered into a recession back in February, scuttling a 128-month expansion, AvaTrade's Naeem Aslam said the Dow was now set up for a correction.
"This indicates that the stock rally has gone a little too far," he said. "However, the upward momentum is still strong because the price is still above all the major, 50, 100, and 200-day smooth moving averages."
Texas, one of the first US states to relax its stay-at-home orders, reported a record number of coronavirus hospitalisations on Monday, with 1,935 patients across the state, according to the Texas Department of State Health Services.
Covid-19 cases have also been slowly ticking up across the US since the Memorial Day holiday on 25 May, according to Johns Hopkins University School of Medicine.
Also in focus on Tuesday was news that European Union efforts to soothe transatlantic trade tensions had stalled, with the upcoming US election potentially causing any potential breakthrough to be delayed until December.
Washington has "stepped back" in recent weeks from talks aimed at defusing a longstanding dispute over aircraft subsidies, with a failure to reach an agreement possibly paving the way for Europe to impose tariffs on billions of dollars of American goods as early as July.
On the data front, small-business owners became more optimistic about an economic rebound throughout May and began to believe that a coronavirus-induced recession would be "short-lived", according to the National Federation of Independent Business.
The NFIB's small-business survey, which posted its sharpest decline in history in March, rose 4.5 points in May to 94.4 - double the increase expected on the Street.
Elsewhere, wholesale inventories in the United States stood at $650.4bn in April, sliding 0.3% month-on-month, according to the US Census Bureau.
Lastly, the number of Job Openings in the US fell to 5.04m at the end of April, according to the US Bureau of Labor Statistics, as the latest Job Openings and Labor Turnover Summary report came in slightly higher than expectations of 5.0m.
In the corporate space, Signet Jewelers posted a softer-than-expected loss and rival Tiffany said store closures had hurt first-quarter sales. Macys shares surged after raising $4.5bn of new financing, while Hertz's stock doubled overnight, erasing all of its post-bankruptcy losses
GameStop will report quarterly earnings after the close.