US STOCKS-Wall Street tumbles on rising coronavirus cases; banks lead declines

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* Nike falls after surprise quarterly loss
* U.S. banks slip as Fed caps shareholder payout
* Facebook biggest drag on S&P 500 and Nasdaq
* Indexes fall: Dow 2.5%, S&P 1.9%, Nasdaq 1.9%

(Updates to mid-afternoon)
By April Joyner
NEW YORK, June 26 (Reuters) - Wall Street's major indexes
tumbled on Friday as several U.S. states imposed business
restrictions in response to a surge in coronavirus cases and as
financial shares tumbled after the Federal Reserve moved to cap
bank dividend payments.
Several U.S. states that were spared the brunt of the
initial coronavirus outbreak or moved early to lift
restrictions are seeing a resurgence in new infections. On
Friday, Texas and Florida ordered bars to close down again.
"You're seeing a pretty dramatic increase in cases," said
Kevin Grogan, managing director of investment strategy at
Buckingham Strategic Wealth in St. Louis. "If people start
feeling again like it's not safe to eat out or go shopping, that
could have a really negative impact on the stock market."
On the benchmark S&P 500 .SPSY , financial shares led in
percentage losses. Bank shares .SPXBK plummeted 5.9% after the
Federal Reserve limited dividend payments and barred share
repurchases until at least the fourth quarter following its
annual stress test. A Wall Street Journal report that the Phase 1 U.S.-China
trade deal could be at risk placed yet more pressure on U.S.
stocks. According to that report, Chinese officials warned that
"meddling" in Hong Kong and Taiwan could lead Beijing to back
away from its commitment to purchase U.S. farm goods.
"It added another log into the risk aversion fire," said
Edward Moya, senior market analyst at OANDA in New York, of the
report on China.
Renewed concerns over the novel coronavirus pandemic has
threatened to derail a strong rally for Wall Street that has
brought the S&P 500 within 11% of its February record closing
high.
During Friday's session, the S&P 500 briefly traded below
its 200-day moving average, an indicator of long-term momentum.
A close below that level could signal further losses.
Even with recent declines, however, the index is on pace for
its best quarterly performance in more than two decades, powered
by massive stimulus measures.
The Dow Jones Industrial Average .DJI fell 637.86 points,
or 2.48%, to 25,107.74, the S&P 500 .SPX lost 58.79 points, or
1.91%, to 3,024.97 and the Nasdaq Composite .IXIC dropped
187.50 points, or 1.87%, to 9,829.50.
Facebook Inc FB.O shares shed 6.6%, weighing the most on
the S&P 500 and Nasdaq, after Unilever PLC ULVR.L and Verizon
Communications Inc VZ.N joined an advertising boycott that
called out the social media giant for not doing enough to stop
hate speech on its platforms. Nike Inc NKE.N shares dropped 7.1% as the footwear maker,
hurt by store closures due to the pandemic, posted a surprise
quarterly loss. Gap Inc GPS.N shares surged 18.1% after the retail chain
entered a 10-year deal with rapper and fashion designer Kanye
West to create a line of clothing under his Yeezy brand.
Friday also marks the reconstitution of the FTSE Russell
indexes, including the large-cap Russell 1000 .RUI and
small-cap Russell 2000 .RUT . Daily trading volume is often
among its highest levels of the year during the reconstitution.
Declining issues outnumbered advancing ones on the NYSE by a
4.49-to-1 ratio; on Nasdaq, a 4.44-to-1 ratio favored decliners.
The S&P 500 posted five new 52-week highs and no new lows;
the Nasdaq Composite recorded 49 new highs and 23 new lows.