US open: Stocks head south amid fears of a second wave of Covid-19 cases
Wall Street stocks opened lower on Monday as market participants struggled with signs of a second wave of Covid-19 cases as the US economy emerges from lockdown.
As of 1530 BST, the Dow Jones Industrial Average was down 1.66% at 25,179.70, while the S&P 500 was 1.21% weaker at 3,004.45 and the Nasdaq Composite came out the gate 0.56% softer at 9,534.89.
The Dow opened 425.84 points lower on Monday, reversing Friday's gains that came as stocks bounced back from sharp losses a day earlier.
At the bell, shares tied to the reopening of the economy such as Carnival, Royal Caribbean, American Airlines and United Airlines were all down at least 4.5%, while Kohl's and Gap also traded lower, as the likes of Alabama, California, Florida, Texas and North Carolina all reported a rise in new coronavirus-related hospitalisations.
Also in focus were comments from Dallas Federal Reserve President Robert Kaplan, who said on Sunday that the US economic recovery hinged on effective public health measures to contain the Covid-19 pandemic.
"The extent we do that well will determine how quickly we recover. We'll grow faster if we do those things well," Kaplan said. "And right now, it's relatively uneven."
Weaker than expected retail and industrial production data out of China and news of a spate of new Covid-19 cases in a major wholesale food market in Beijing was also weighing on sentiment.
Oanda's Craig Erlam said: "It seems a combination of a new spike in Covid cases in Beijing and disappointing Chinese data is weighing on sentiment at the start of the week. The numbers are still very low in the Chinese capital but the risks are high which may explain the apprehension we're seeing in the markets this morning.
"With central bank still pumping enormous amount of cash into markets, I have no doubt there'll be appetite whenever we see dips like this. Obviously a few failures may test the resilience of the rally but as we've seen already, there's a huge disconnect between markets and the economic reality, there's little reason to think that's about to change."
On the macro front, manufacturing sector activity in the New York state area stabilised unexpectedly in June as the Federal Reserve Bank of New York's regional manufacturing gauge bounded back 48.5 points from the prior month's sharp fall to -0.2.
That was significantly ahead of the median forecast from economists for an improvement to -28.5 and pointed to upside risk for the Philly Fed index due out on Thursday, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Kaplan will deliver a speech at 1600 BST, while San Francisco Fed head Mary Daly will speak at 1630 BST.
No major corporate earnings were slated for release on Monday.