S&P 500 pares gains as market mood deteriorates
- US equity indexes retreat from highs as market mood sours.
- COVID-19 fears and geopolitical tensions offset market optimism after upbeat US data.
The major US equity indexes are giving away gains after a strong opening on Tuesday as investors’ fears about a second wave of coronavirus infection and geopolitical frictions in Asia have offset the enthusiasm following upbeat US macroeconomic data.
The S&P Index is trading about 2% below intra-day highs, with the Dow Jones and the Nasdaq indexes 1.40% and 1.20% up, after having rallied 2,70% and 2.07% respectively. Likewise, the CBOE Volatility Index is now 1.25% down, coming back from -5% at the opening time.
COVID-19 fears offset market optimism
Investor’s optimism following a string of upbeat US figures has been outweighed by disturbing news about an increase of coronavirus infections in Florida, which have forced Miami authorities to pause its reopening plans. News from China have increased concerns as Beijing reported dozens of new COVID-19 cases and is contemplating introducing a new set of restrictions.
Furthermore growing geopolitical tensions between India and China after India condemned an attack from China that killed three of its soldiers and North Korea blowing up the liaison office used for talks with South have contributed to sour investors’ mood.
Before that, the market had welcomed the 17.7% increase on the U.S. retail sales jumped 17.7% last month, which beat expectations of a 8% increase. Beyond that, US industrial production posted a 1.4% expansion in May after a 14,5% drop in April.