Dow Drops 700 to End Week

Stocks fell sharply on Friday after Texas rolled back some of its reopening measures, raising concern about the latest spike in coronavirus cases and its impact on the economy.

The Dow Jones Industrials plummeted 730.05 points, or 2.8%, to close Friday at 25,015.55.

The S&P 500 doffed 74.71 points, or 2.4%, to 3,009.05.

The NASDAQ Composite tumbled 259.78 points, or 2.6%, to 9,757.22.

Those losses led to the major averages’ second weekly drop in three weeks. The Dow dropped 3.3%, and S&P 500 fell 2.9%, for the week and the NASDAQ lost 1.9% in that time period.

Texas ordered all bars and establishments that receive more than 51% of their gross receipts to close. Restaurants, meanwhile, must limit on-premise dining to less than 50% indoor capacity. “At this time, it is clear that the rise in cases is largely driven by certain types of activities, including Texans congregating in bars,”

Florida also announced it would suspend “on premises consumption” of alcohol at bars in the state after reporting a surge of nearly 9,000 new virus cases. In Arizona, the number of cases jumped by 5.4%, topping a seven-day average of 2.9%. At a nationwide level, the daily average number of confirmed coronavirus cases is now more than 33,000.

Shares of companies that would benefit from an economic reopening tumbled. United Airlines, American and Delta all slid more than 3%. Cruise operator Norwegian Cruise line dropped 5%.

The moves came after the Fed’s annual stress test of the major banks showed some banks could get close to minimum capital levels in scenarios related to the coronavirus pandemic.

Because of this, banks must suspend share repurchase programs and cap dividend payments at current levels for the third quarter. Wells Fargo and Capital One may be forced to cut their dividends, according to a Morgan Stanley analyst.

The announcement sent some bank shares lower on Friday. Bank of America and JPMorgan Chase both fell more than 5%. Wells Fargo slid 7.4% and Goldman Sachs fell 8.7%.

Meanwhile, Nike shares slid 7.6% on the back of a surprising quarterly loss for the apparel giant. The company reported a loss of 51 cents per share and revenue of $6.31 billion for its fiscal fourth quarter. Nike’s quarterly revenue reflected a drop of 38% on a year-over-year basis.

The losses Friday morning came despite a record rise in consumer spending in May. The Commerce Department reported Friday that spending increased 8.2% last month, a positive sign for the U.S. economy amid a growing number of negative coronavirus headlines.

The government’s report on how much Americans spent on goods and services in May was the largest one-month gain dating back to records beginning in 1959. Consumer spending represents more than two-thirds of economic demand in the U.S.

Prices for the 10-Year Treasury rose sharply, lowering yields to 0.64% from Thursday’s 0.69%. Treasury prices and yields move in opposite directions.

Oil prices dipped 60 cents to $38.12 U.S. a barrel.

Gold prices recovered $13.10 to $1,783.70 U.S. an ounce.