(Bloomberg) -- U.S. stocks fell to the lowest level in more than two weeks and Treasuries rose as a resurgence in new virus infections began halting progress on reopening the American economy. Advertiser defections sent Facebook Inc. to its biggest drop since March, worsening the market’s decline.
The S&P 500 dropped 2.4% as Texas and Florida halted drinking at bars and Arizona reported a surge in infections. Data showed consumer spending surged by a record in May as Americans spent relief payments, though incomes slumped. Big banks slid after the Federal Reserve capped dividends and banned buybacks through September.
“People should be somewhat concerned about what is going on in the Sun Belt and the dramatic increase in cases we’ve seen,” said Yousef Abbasi, Global market strategist at StoneX.
Elsewhere, copper posted its sixth consecutive weekly advance, with prices briefly topping $6,000 a ton. The dollar strengthened for a third day. The 10-year Treasury yield fell as low as to 0.63%
U.S. markets had largely shrugged off concerns that a second wave of the pandemic could force policymakers to reverse plans to re-open, though signs are mounting that states in the South and Southwest may not be able to avoid rolling back some economic activity. Investors remain convinced that the Fed is ready to amp up its assistance should the economy start to sputter anew.
Record Virus Cases in U.S. Defy States’ Efforts at Control
The Fed “is going to support this market one way or the other,” Sandy Villere, portfolio manager at Villere & Co., said on Bloomberg TV. “There are going to be a few more dips to come. It’s amazing, the market doesn’t care about fundamentals or earnings at this point, they care about the pandemic and the pandemic only.”
In remarks on Friday, European Central Bank President Christine Lagarde said the recovery from the coronavirus pandemic will be “restrained” and will change parts of the economy permanently. While the worst of the crisis might be over, it’ll take time for the “phenomenal” jump in savings to trickle into higher investment and spending, she said.
Oil traded below $39 a barrel in New York as Russia slashed exports of its flagship crude Urals to the lowest in at least 10 years. Gold registered a third weekly advance, the longest winning run since January.
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