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* Carnival's credit rating cut to junk status by S&P
* Dell jumps on report of spinning off VMware stake
* Indexes off: Dow 2.51%, S&P 2.42%, Nasdaq 2.06%
(Updates to early afternoon)
By Medha Singh and Devik Jain
June 24 (Reuters) - U.S. stocks fell sharply on Wednesday as
a surge in coronavirus cases in the United States fanned fears
of a fresh lockdown, with worsening forecasts of the economic
damage from the pandemic further denting sentiment.
The United States has recorded the second-largest rise in
infections since the health crisis began, with states where
restrictions meant to slow the spread of the disease were lifted
early witnessing a flare up in cases. The governors of New York, New Jersey and Connecticut
announced that visitors from states with high coronavirus
infection rates must self-quarantine for 14 days on arrival.
Shares of U.S. airlines, resorts and cruise operators
slumped and the S&P 1500 airlines index fell 7.3%. Royal
Caribbean Cruises Ltd RCL.N , Norwegian Cruise Line Holdings
Ltd NCLH.N and Wynn Resorts WYNN.O shed between 9% to 12%.
"There is a sudden perception change among investors related
to the extent of new round of virus cases," said Andre Bakhos,
managing director at New Vines Capital LLC in Bernardsville, New
Jersey.
"The greatest focus is on COVID-19 (news) more than anything
else until we get a more granular look at to what's going on."
The pandemic was causing wider and deeper damage to economic
activity than first thought, the International Monetary Fund
said, prompting it to slash 2020 global output forecasts further
to 4.9% from 3.0%. Advanced economies have been particularly hard hit, with
U.S. output now expected to shrink 8.0%, more than 2 percentage
points worse than the April forecast.
Wall Street's fear gauge, the CBOE volatility index .VIX ,
rose to a one-week high at 35.86.
A slate of better-than-feared economic reports, easing
lockdowns and massive stimulus measures have powered the Nasdaq
to an all-time high and put the benchmark S&P 500 on track for
its best quarterly performance since 1975.
The S&P 500 and Dow Jones Industrials .DJI are just about
10% and 13.7% from their respective February record closing
highs.
At 12:52 p.m. ET, the Dow Jones Industrial Average .DJI
was down 656.54 points, or 2.51%, at 25,499.56, the S&P 500
.SPX was down 75.81 points, or 2.42%, at 3,055.48. The Nasdaq
Composite .IXIC was down 208.52 points, or 2.06%, at 9,922.85.
The biggest decliner among the 11 major S&P sub-sectors was
energy .SPNY , which tracked a steep fall in oil prices.
O/R O/R
Carnival Corp CCL.N declined 10% as ratings agency
Standard & Poor's downgraded its bonds to junk status,
forecasting continued weak demand for the cruise industry.
On the other hand, Dell Technologies Inc DELL.N jumped 11%
after a report said the company was considering spinning off its
roughly $50 billion stake in cloud computing software maker
VMware Inc VMW.N . VMware advanced 2.7%.
Declining issues outnumbered advancers more than 9-to-1 on
the NYSE and 6-to-1 on the Nasdaq.
The S&P index recorded one new 52-week high and no new low,
while the Nasdaq recorded 36 new highs and nine new lows.