Dow tumbles as coronavirus and tariffs rattle investors: June 24, 2020

By CNN Business

Updated 5:20 p.m. ET, June 24, 2020
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4:04 p.m. ET, June 24, 2020

Stocks have their worst day in two weeks

From CNN Business' Anneken Tappe

US stocks tumbled on Wednesday, ending sharply in the red. Investors worried about rising Covid-19 infection in parts of the country, quarantine requirements for intra-US travel and newly proposed tariffs on EU imports.

The three major stock indexes recorded their worst performance in nearly two weeks.

  • The Dow ended 2.7%, or 710 points, lower. Not a single Dow stock ended in the green.
  • The S&P 500 closed down 2.6%.
  • The Nasdaq Composite fell 2.2%, just one day after logging a record closing high and its longest winning streak since December.
3:59 p.m. ET, June 24, 2020

Apple is re-closing stores again, this time in Texas

From CNN Business' Rishi Iyengar

Apple continues to close its reopened stores around the United States as coronavirus cases spike, with seven retail outlets in Texas the latest to shut their doors.

"Due to current Covid-19 conditions in some of the communities we serve, we are temporarily closing stores in these areas," the company said in a statement on Wednesday. "We take this step with an abundance of caution as we closely monitor the situation and we look forward to having our teams and customers back as soon as possible."

The locations to close will be Highland Village, First Colony Mall, Houston Galleria, Memorial City, Willowbrook Mall, Baybrook and The Woodlands, Apple said.

The move comes days after Apple closed 11 stores across Florida, North Carolina, South Carolina and Arizona. All four states have experienced large spikes in coronavirus cases in recent days.

Texas is one of seven states seeing record hospitalizations, reporting more than 5,000 cases in a single day earlier this week.

Apple has 510 stores worldwide, 271 of which are in the United States.

3:26 p.m. ET, June 24, 2020

Zoom hits all-time high on brutal day for market

From CNN Business' Paul R. La Monica

It appears that the Zoom boom has room to run. Shares of the video conferencing company hit a new all-time high Wednesday, even as the broader market plunged.

Zoom (ZM) was one of just four companies in the Nasdaq-100 index in green as of late afternoon, along with T-Mobile (TMUS), biotech Gilead Sciences (GILD) and virtualization software firm Citrix (CTXS).

All 30 Dow stocks were in red and just 18 S&P 500 stocks (including T-Mobile, Gilead and Citrix) were higher.

Zoom and Citrix have been among the few beneficiaries of the slowdown in the broader economy as more people work from home. Zoom, with a market value of about $72 billion, is now worth more than nearly 85% of the companies in the S&P 500.

2:26 p.m. ET, June 24, 2020

Senators urge companies to stop dividend payments during pandemic

From CNN Business' Anneken Tappe

A group of US Senators, led by Democrat Brian Schatz of Hawaii, want America's banks to stop paying dividends during the pandemic recession. The goal is to ensure they are able to absorb losses they might face.

The senators, which included Massachusetts Senator Elizabeth Warren, also urged the Federal Reserve in a letter to make sure the banks held enough capital to continue lending to struggling businesses.

The results of the Fed's bank stress test, which assesses their capital buffers during crises, are due tomorrow.

“Our economy needs a safe and sound banking system to serve as a source of strength through these difficult times,” the senators wrote in their letter Wednesday

This isn't the first call for banks to stop paying out dividends. Former Fed Chair Janet Yellen is also in favor of a pause given the uncertainty the economy is facing.

The Covid-19 recession has made many businesses reliant on credit lines after the economy shut down in the spring to stop the spread of the virus.

2:00 p.m. ET, June 24, 2020

Royal Caribbean, Carnival and Norwegian plunge

From CNN Business' Paul R. La Monica

Carnival, Royal Caribbean and Norwegian were the three worst-performing stocks in the S&P 500 Wednesday. Shares of each cruise company plunged about 10% as the broader market slid due to concerns about an increase in Covid-19 cases in several states.

But the cruise companies had their own company-specific reasons to explain the drops.

Carnival (CCL), which reported a $4.4 billion quarterly loss last week, had its credit rating cut to junk status by Standard & Poor's late Tuesday. Moody's had already slashed Carnival's bond to below investment grade levels. Meanwhile, analysts at Barclays downgraded shares of Royal Caribbean (RCL) and Norwegian (NCLH) Wednesday to "equal weight" - essentially a lukewarm neutral rating.

In its report, S&P said that it expects "Carnival's credit measures to remain very weak through 2021 because of its plans for a gradual reintroduction of capacity and our forecast for continued weak demand." 

The future for cruise companies remains highly uncertain. It's not clear when they will resume voyages -- or even whether consumers will feel comfortable booking any trips. As a result, shares of Carnival and Royal Caribbean have each plummeted more than 60% this year while Norwegian has lost nearly three quarters of its market value in the same period.

Norwegian said last week it was canceling cruises that were tentatively planned for later this summer and will extend the suspensions through September.

1:07 p.m. ET, June 24, 2020

Stocks are unlikely to fall to March-lows: Mohamed El-Erian

From CNN Business' Anneken Tappe

Four items of bad news are weighing on the market today, says Mohamed El-Erian, chief economic adviser at Allianz: The IMF's lower growth forecast, rising Covid-19 infections, proposed tariffs on $3.1 billion worth of EU imports, and a mandatory quarantine for anyone coming from high-infection rate states to New York, New Jersey or Connecticut.

"All this speaks to a weaker economy," El-Erian told Alison Kosik on the CNN Business' digital live show Markets Now.

That said, stocks are unlikely to retest the lows they hit in March, he said. With monetary and fiscal stimulus in high gear already, there is a backstop to the economy.

The Federal Reserve has moved to buy non-traditional assets including high yield bonds. Some are wondering whether the central bank will go as far as buying stocks to stabilize the market, but El-Erian believes this is unlikely.

Even the step to buy high yield bonds was still a bit of a head-scratcher because the long-term effects of such unprecedented steps are uncertain, he said.

1:00 p.m. ET, June 24, 2020

Slack is flourishing even though it's a "time of turbulence"

From CNN Business' Anneken Tappe

Millions of Americans have been working from home for months as the coronavirus pandemic has shut down work life as we knew it.

In this new normal, messaging and conferencing companies like Slack (WORK) and Zoom (ZM) are flourishing because they're ever more necessary. Slack's revenues grew more than 50% in the last quarter.

That said, companies are struggling with an unprecedented economic environment.

"We don’t want global pandemics but it is accelerating a shift to digital transformation," said Slack CEO Stewart Butterfield on the CNN Business' digital live show Markets Now.

"It's really a time of turbulence, he added. There is a "strong tail wind on one side, strong head wind on the other."

The company is now launching "Slack Connect", which allows different companies to communicate with each other using its channel-based platform, which is traditionally used for internal communications only.

"I think it will be a big step forward for how corporations communicate but also for security," Butterfield said.

12:09 p.m. ET, June 24, 2020

'Sell stocks. The economy is going down,' says MUFG economist

From CNN Business' Anneken Tappe

The stock market doesn't like the escalation of Covid-19 infections across America's Southern states one bit. New York, New Jersey and Connecticut will require anyone coming from areas with high infection rates to quarantine for 14 days. This doesn't bode well at all for the reopening of the economy.

The Big Apple is going to turn into a rotten apple for tourism if visitors are forced to quarantine and this travel restriction shows the second wave of coronavirus cases is putting its foot down hard on the economic recovery which looks more and more dicey by the day. Sell stocks. This economy is going down," said Chris Rupkey, chief financial economist at MUFG.

While investors initially worried about a second wave of infections in the fall, it seems these concerns could actually dominate the summer.

11:52 a.m. ET, June 24, 2020

Stocks tumble: Dow plummets more than 800 points

From CNN Business' Anneken Tappe

The Dow has now fallen more than 800 points, or 3.1%.

Investors are clearly downcast today.

The S&P 500 is down 2.9% and the Nasdaq Composite is down 2.6%.

As Covid-19 infections rise across some states, New York, New Jersey and Connecticut announced people coming from areas with high infection rates have to quarantine for 14 days.