FILE PHOTO: Traders wear masks as they work on the floor of the New York Stock Exchange as the outbreak of the coronavirus disease (COVID-19) continues in the Manhattan borough of New York, U.S., May 27, 2020. REUTERS/Lucas Jackson     TPX IMAGES OF THE DAYReuters

  • US equities sank on Monday as investors turned less optimistic towards a sharp economic recovery.
  • Fears of a second wave of COVID-19 cases intensified, with Texas and North Carolina reporting record hospitalizations on Saturday. California, Alabama, and Florida notched sharp increases in daily cases.
  • Airline stocks including Delta, United, and American Airlines fueled indexes’ downtrend through the session.
  • Oil traded lower as well, with West Texas Intermediate crude dropping as much as 5.2%, to $34.36 per barrel.
  • Watch major indexes update live here.

US stocks tumbled on Monday as investors continued to reckon with the likelihood of a second wave of coronavirus cases.

Nearly half of the 50 US states are seeing a rebound in infections as reopenings continue. North Carolina and Texas reported record hospitalizations on Saturday, while Florida, California, and Alabama post sharp increases in daily cases.

Economic data out of China signaled that, even as outbreaks are contained and consumer spending improves, the V-shaped rebound sought by investors isn’t likely to materialize.

Here’s where US indexes stood shortly after the 9:30 p.m. ET market open on Monday:

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The decline in equities comes just two sessions after major US indexes suffered their worst single-day decline since March.

Airline stocks led losses. United, American, and Delta Air Lines all sank, while Royal Caribbean and Norwegian Cruise Lines cratered as well. Traders continued to bet against travel activity surging back to past norms.

Popular bankruptcy-play Hertz slid after the car-rental chain filed to sell $500 million in stock. The struggling firm has seen violent price swings through recent sessions as retail investors bet on a miraculous recovery from severe indebtedness. The new stock offering gives Hertz a preferable fundraising option, though the company warned investors the shares “could ultimately be worthless” if it goes under.

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Oil continued to slide as hopes for soaring demand gave way to renewed virus risks. West Texas Intermediate crude declined as much as 5.2%, to $34.36 per barrel. International standard Brent crude slumped 3.9%, to $37.24 per barrel, at intraday lows.

Despite rising case counts throughout the US, Morgan Stanley economists doubled-down on their bet for a V-shaped recovery in a Sunday note. The firm told clients it expects global gross domestic product to rebound to pre-pandemic levels by the end of the year. Even if a second wave of cases threatens the recovery, the bank’s base-case sees “selective lockdowns” keeping the world economy from plunging further into recession.

Monday’s slide follows a modest increase to close out last week. Friday saw all three major indexes trend higher to retrace some of Thursday’s losses. The University of Michigan’s consumer sentiment survey showed optimism jumping the most since 2016 in June as positive rehiring figures boosted hopes for a labor-market recovery.

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