Stock plunged with showbiz knocked hard as COVID-19 infections surged, three governors issued travel restrictions and investor hopes for a recovery fizzled.
The DJIA plunged more than 700 points, or 2.7%, its worst showing in weeks. The S&P 500 and Nasdaq were both down sharply. Media and entertainment stocks, sensitive to advertising, film and TV production and theatrical release, were well in the red with movie chains Cinemark and AMC Entertainment among the biggest losers, down, respectively, more than 8% and 6%.
Walt Disney ended off nearly 4% as a coalition of resort unions organized a protest for this weekend at Disneyland in Anaheim against the theme park’s planned reopening in July even as COVID-19 cases spike,
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Production has been tentatively trying to restart, movie theaters to open and bussinesses to advertise more as states reopen. It’s not clear if and how restrictions may be tightened again.
Social media giants were also slammed with Facebook and Twitter both down 3.5%. Broadcasters felt the pain, with Nexstar down nearly 4% and Sinclair more than 5%.
The market had hoped that the worst of the pandemic was behind us but Florida and California on Wednesday reported record high one-day tallies of new coronavirus cases. Arizona, Texas and a handful of other states also had grim numbers. Govern Andrew Cuomo of New York and his counterparts in New Jersey and Connecticut issued a travel advisory that requires people arriving from states with high coronavirus rates to quarantine for 14 days.
California, Texas, Arizona and Florida together contribute more tha 30% of U.S. GDP, said one economist.
The market had held steady Tuesday despite the eruption of new cases and testimony by Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, before a House committee that the “next couple of weeks are going to be critical” in containing the virus in states in the South and West of the U.S.
Also Wednesday, the IMF downgraded its global forecast for 2020 economic growth to negative 4.9% from negative 3% in April – the lowest estimate since it’s been forecasting.
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