U.S. stocks slumped 2.6 per cent as investors grew anxious that the resurgence in virus cases in multiple states will hamper the economic recovery. Yields on Treasuries fell and the dollar strengthened.

All 11 sectors in the S&P 500 sank at least 0.9 per cent, with energy, financials and industrials down more than 3 per cent after data showed Florida and California set daily records for new cases, while Houston said its intensive-care unit beds are at 97 per cent capacity. Travel stocks and other companies that had been climbing amid reopening optimism got hammered with New York, New Jersey and Connecticut requiring visitors from virus hot spots to self-quarantine. Even the tech-heavy Nasdaq Composite fell for the first session in nine.

“As we see these cases continue to spread, we’re seeing micro contractions in those states and the market’s basically looking forward and saying, ‘This looks like it’s gaining momentum again and there’s nothing that indicates any path to slowing that momentum’,” said Peter Mallouk, president and chief executive officer of Creative Planning. “And so we’re seeing this rotation back, away from what we would normally see do really well in a market recovery to the things that hold up through a market contraction.”

Market sentiment is rapidly turning more negative on concern that the spreading coronavirus could force policy makers to slow the pace or reverse business re-openings. At the same time, there’s the potential for trade tensions to resurface between the European Union and the U.S.

The White House is weighing new tariffs on US$3.1 billion of exports from France, Germany, Spain and the U.K. The American Trade Representative wants to impose new tariffs on European exports like olives, beer, gin and trucks, while increasing duties on products including aircrafts, cheese and yogurt, according to a notice published late Tuesday evening. The EU is also debating whether to keep the door shut to American travelers this summer.

Elsewhere, the International Monetary Fund downgraded its outlook for the world economy, projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.

“you have a situation in which, you know, you could argue that the market is fairly valued, or stretched, however you want to put it, but it’s overbought,” said Quincy Krosby, chief market strategist at Prudential Financial Inc. “Under these conditions, with a market that’s done so well, it typically is prudent to take some profit to allow the market to burn off some froth, consolidate, and then get ready for the next move.”

These are some of the main moves in markets:

Stocks

The S&P 500 Index declined 2.6 per cent to 3,050.33 as of 4:16 p.m. New York time, the lowest in more than a week on the largest drop in almost two weeks.

The Dow Jones Industrial Average declined 2.7 per cent to 25,445.94, the lowest in almost two weeks on the biggest drop in almost two weeks.

The Nasdaq Composite Index declined 2.2 per cent to 9,909.17, hitting the lowest in more than a week with the first retreat in almost two weeks.

Currencies

The Bloomberg Dollar Spot Index gained 0.6 per cent to 1,217.89, the biggest rise in almost two weeks.

The euro declined 0.5 per cent to US$1.1253, the largest fall in more than a week.

The Japanese yen depreciated 0.5 per cent to 107.06 per dollar, the weakest in more than a week on the biggest dip in more than three weeks.

Bonds

The yield on two-year Treasuries declined less than one basis point to 0.18 per cent, the lowest in two weeks.

The yield on 10-year Treasuries fell three basis points to 0.68 per cent, the lowest in almost two weeks on the biggest drop in almost two weeks.

Britain’s 10-year yield fell two basis points to 0.189 per cent, the lowest in almost four weeks.

Commodities

West Texas Intermediate crude declined 5.5 per cent to US$38.16 a barrel, the lowest in more than a week on the biggest drop in almost two weeks.

Gold weakened 0.2 per cent to US$1,765.64 an ounce.