By Yasin Ebrahim
Investing.com – Wall Street fell on Tuesday as optimism in tech stocks faded on rising worries that some states lifting restrictions too soon could spark a second wave of infections and inflict further economic damage.
The fell 1.89%, or 457 points, the slipped 2.05%, while the dropped 2.06%.
Investor optimism over the reopening of the economy remained cautious as White House health advisor Dr. Anthony Fauci told Congress that the virus is not under control yet and raised concerns that some states are reopening businesses too soon, which may lead to further Covid-19 outbreaks.
The warning comes as data from the White House coronavirus task force showed a spike in new infections in the past week, NBC reported, citing leaked data.
With concerns mounting over a second wave of coronavirus infections, investors seemingly reined in their bullish bets on technology, prompting FAANG to turn negative and end the day in the red.
Google-parent Alphabet (NASDAQ:) fell 1.90% even as Citigroup upgraded its price on the tech giant to $1,600 from $1,400.
Healthcare, which had proved resilient in recent sessions on signs of progress on a potential coronavirus vaccine, was pressured by a fall in Gilead Sciences (NASDAQ:) and Moderna (NASDAQ:), the front runners in the race to find Covid-19 treatments.
Financials, mostly banks, came under pressure as President Donald Trump exacerbated worries about a negative interest rate environment after calling on the Federal Reserve to deliver deeper interest rate cuts. Over the past few months, the Fed has cut rates to within a quarter-point of zero and policymakers stressed that negative interest rates were not a proven cure for economic crises.
Bank of America (NYSE:), Goldman Sachs (NYSE:) and Citigroup (NYSE:) were down more than 3%.
Trump has been a vocal critic of Fed Chairman Jerome Powell and expressed frustrations that the central bank had upped rates too quickly and subsequently trimmed rates too slowly.
Investors will look to Powell’s virtual conference slated for Wednesday at 9:00 AM ET for clues on monetary policy. The Fed chief is expected to deliver an economic update, but may take the opportunity to push back against the idea of cutting rates below zero.
The call on the Fed to cut more comes as the central bank got its historic corporate bond-buying program underway — a move announced in March to avert a credit crisis.
On the economic front, investors continued to digest further evidence the U.S. economy is in crisis as core inflation, which excludes food and energy, recorded consecutive month-on-month declines for only the second time in the series’ 63-year history. The last time was 1982, ING said.
In deal news. meanwhile, Grubhub (NYSE:) surged 29% on reports that Uber Technologies (NYSE:) had tabled an offer for the company, The company did not confirm talks, but said it was always looking at ways to increase shareholder value.
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