Stocks Go Into Reverse As Virus Fears Resurface

Global stocks mostly fell Tuesday as fears sparked by fresh lockdowns and bad economic news prompted profit-taking after strong gains the previous session.

European indices slipped after a pessimistic growth forecast by the European Commission which said the eurozone economy will contract by 8.7 percent in 2020 due to the coronavirus crisis.

Chris Beauchamp, chief market analyst at IG trading group, said the EU outlook pours "cold water on the economic recovery narrative that had held sway over the past few sessions thanks to data from the US and China."

Wall Street stocks also pulled back, with the Nasdaq finishing down 0.9 percent to end a streak of three straight records at 10,343.89.

Sentiment in Europe and the United States was also undermined by a bout of late selling in Chinese markets, although Shanghai managed a slightly firmer close.

"Investors are pausing for breath," observed Fiona Cincotta, analyst at City Index.

The easing of lockdown measures and reopening of economies has been the key driver of a months-long charge across equities, but a new surge of infections in several countries gave investors pause.

Melbourne, Australia's second-biggest city, has locked down more than five million residents after virus cases there spiked.

Fawad Razaqzada at ThinkMarkets said it was unclear whether Tuesday's pullback was just a limited retracement "or something more significant."

For now, he said, "the path of least resistance remains to the upside despite today's weakness."

Investors are beginning to focus on the upcoming second-quarter earnings period, which begins in earnest next week.

Companies in the S&P 500 are projected to suffer an average 43.8 percent drop in profits during a period devastated by coronavirus shutdowns, according to Factset.

In a rare incidence of upbeat business news, Samsung Electronics said Tuesday it expects to see operating profit jump by 23 percent in the second quarter, which is much better than the single-digit fall that analysts had forecast.

Back in the US, Walmart rose 6.8 percent following a report that the retail giant will soon launch a subscription service to compete with Amazon Prime.