US STOCKS-S&P 500 ends lower on fears of virus resurgence in economic reopening

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(Updates to close, adds commentary)
By Sinéad Carew
New York, May 12 (Reuters) - The S&P 500 closed lower after
a choppy session on Tuesday as investors took profits following
a warning from the top U.S. infectious disease expert that
premature moves to reopen the nation's economy could lead to
novel coronavirus outbreaks and set back economic recovery.
Investors were weighing the potential for a second wave of
virus infections against hopes that easing of stay-at-home
restrictions could ignite a recovery in the U.S. economy, which
has been severely damaged by the virus.
Anthony Fauci, the director of the National Institute of
Allergy and Infectious Diseases, told Congress that the virus,
which has already killed 80,000 Americans, was not yet under
control and that there would not likely be a treatment or
vaccine in place by late August or early September. And reports of new clusters of coronavirus infections in
countries such as China, South Korea and Germany where lockdowns
had been lifted appear to have added to worries. Optimism about an economic recovery and massive stimulus
measures have already helped the S&P 500 climb about 34% to
Tuesday's intraday high from the March 23 low of the
pandemic-driven selloff.
"It goes back to science versus the Federal Reserve. The
Federal Reserve has been supportive of the market ... What's
going to win here?," said Phil Blancato, chief executive of
Ladenburg Thalmann Asset Management in New York.
"From the science viewpoint if we open too quickly, we'll
just go back to where we were. But if we don't open at all, we
have this economic malaise."
So, with concerns about potential for declines, participants
like Dennis Dick, proprietary trader at Bright Trading LLC in
Las Vegas, were anxious to lock in their profits.
"This market today is playing it a little safer," he said.
"People are very nervous about how the reopening is going to
go."
Unofficially, the Dow Jones Industrial Average .DJI fell
1.73% to end at 23,803.51 points, while the S&P 500 .SPX lost
1.87%, to 2,875.46.
The Nasdaq Composite .IXIC dropped 1.86%, to 9,021.36.
Tuesday's data showed that U.S. consumer prices dropped by
the most since the Great Recession in April, due to a plunge in
demand for gasoline and services including airline travel as
people stayed home during the coronavirus crisis. But prices for food consumed at home rose 2.6% in the
largest advance since February 1974, leaving some investors
anxious about the prospect of stagflation, if consumers cannot
keep up with price increases for essentials.
"What happens if the cost of essential goods get more
expensive and you're not earning enough money. That could become
really problematic," said Ladenburg Thalmann's Blancato.
Helping to drag down the financial sector was a big decline
in BlackRock Inc BLK.N , after its top shareholder PNC
Financial Services Group Inc PNC.N said it planned to sell its
entire 22% stake in the world's largest asset manager.
Online food delivery company GrubHub Inc GRUB.N surged
after a person familiar with the matter said Uber Technologies
Inc UBER.N was in advanced talks to buy the company in an
all-stock deal.