TOPLINE
The market opened lower on Friday, with stocks taking a hit from the Federal Reserve’s latest bank stress test results and a new record number of daily coronavirus cases in the United States.
Wall Street remains worried about a spike in new cases across the country.
Spencer Platt/Getty Images
KEY FACTS
The Dow Jones Industrial Average was down 0.8%, over 200 points, at Friday’s open, while the S&P 500 fell 0.6% and the tech-heavy Nasdaq Composite lost 0.5%
Bank stocks fell after the Federal Reserve placed new restrictions on the banking industry for the first time since the aftermath of the 2008 financial crisis, requiring them to suspend share buybacks and cap dividend payments in the third quarter of 2020.
The Fed’s annual stress test found that “several” big banks could get uncomfortably near minimum capital levels if the coronavirus recession worsens.
Stocks also continued to take a hit from rising fears over a resurgence of coronavirus, with the United States posting a daily record of nearly 40,000 new cases on Thursday, surpassing the previous peak in April, according to data from Johns Hopkins University.
New infections are spiking in more than 31 states: Some, like Texas and Florida, have been forced to pause their reopening plans due to thousands of daily new cases.
The market’s losses came despite a record rise in consumer spending last month: The Commerce Department on Friday reported that spending increased 8.2% in May, its largest one-month gain ever.
Tangent
Shares of Gap jumped more than 14% on Friday morning after the company announced a new partnership with Kanye West, who Forbes estimates has a net worth of $1.3 billion. Nike’s stock, on the other hand, plunged more than 3% after the company posted a surprise loss in the fourth quarter, with sales falling 38% from last year.
Key background
Stocks cut losses and turned positive in a volatile trading session on Thursday. The market at first opened lower on the back of more disappointing jobless claims data: Another 1.5 million Americans filed for unemployment in the week ending June 20, more than the 1.3 million expected. But bank stocks surged, leading the market higher, after federal regulators said they will loosen bank restrictions, including the Volcker Rule.
Full coverage and live updates on the Coronavirus