NEW YORK – The swine flu gave Wall Street a reason to turn cautious Monday.
The Dow Jones industrial average gave up a midday recovery and retreated about 0.6 percent as the swine flu’s death count in Mexico grew to about 150 people from 100.
There have been far fewer cases reported elsewhere, including the United States, and no other fatalities. Investors were also mindful of previous health scares that had only short-term jostling effects on the market including bird flu, Mad Cow disease and West Nile virus — none of which ever escalated to into global pandemics.
Still, Wall Street decided to hedge its bets as the U.S. cases of swine flu doubled to about 40.
Ryan Larson, senior equity trader at Voyageur Asset Management, said the flu was a “wild card” for the market. “It’s still a little bit early to go into panic mode, but it’s definitely something that needs to be watched closely,” Larson said.
Airline and other travel-related stocks suffered the sharpest losses Monday. The European Union health commissioner advised Europeans to avoid nonessential travel to Mexico and the United States, but the Centers for Disease Control and Prevention in Atlanta said the recommendation was unwarranted.
Craig Peckham, market strategist at Jefferies & Co., called the flu an “easy excuse” for investors to cash in any profits they may have made in recent weeks. The Dow stalled last week, but remains up about 23 percent since its nearly 12-year low on March 9 after better-than-expected earnings and economic reports.
The Dow’s losses were mitigated by General Motors Corp., which said it will cut 21,000 jobs by next year and ask the government to exchange GM debt for stock. The bailed-out automaker’s announcement did not erase the possibility of a GM bankruptcy, but made it appear a bit less likely. Shares rose 31 cents, or 19 percent, to $2.
In afternoon trading, the Dow Jones industrial average fell 51.61, or 0.6 percent, to 8,024.68.
Broader stock indicators were also lower. The Standard & Poor’s 500 index fell 8.67, or 1 percent, to 857.56, and the Nasdaq composite index fell 13.15, or 0.8 percent, to 1,681.14.
The stocks of airlines, hotels and other travel-related companies posted sharper losses.
Starwood Hotels and Resorts Worldwide Inc. fell 8.1 percent, Carnival Corp. fell 12.1 percent, and Delta Air Lines Inc. fell 12.7 percent.
Some pharmaceutical stocks, however, climbed. GlaxoSmithKline rose 7.6 percent, and Gilead Sciences Inc. rose 4.2 percent. The two companies make flu treatments.
The Russell 2000 index of smaller companies fell 9.27, or 1.9 percent, to 469.47.
There were about two declining stocks for every rising stock on the New York Stock Exchange, where volume came to a light 817 million shares.
In anticipation of an economic turnaround, many investors like Robert Pavlik, chief market strategist at Banyan Partners LLC, have been paring back on traditionally safe stocks like consumer staples and buying more financials and consumer discretionary stocks.
“We are in a downturn, in this slowing economic phase, but it’s not as bad as people originally perceived,” Pavlik said. “What we’re telling our clients is: Don’t focus on the last three months.”
But others say Wall Street needs more than just evidence that U.S. economy’s decline is moderating.
“At a certain point, further gains have to be predicated on things getting fundamentally better, as opposed to less bad,” Peckham said.
More earnings are scheduled to be released this week. Wall Street is also anxious as it waits for the results of the government’s stress tests of the 19 largest U.S. banks. Regulators briefed bank officials on Friday about the tests, which will determine which banks may need further help from the government, but the results will not be publicly released until May 4.
U.S. government bond prices were mixed. The yield on the benchmark 10-year Treasury note dipped to 2.93 percent from 3.00 percent late Friday. Bond prices move opposite to yields.
The dollar was mostly higher against other major currencies, while gold prices fell.
Light, sweet crude fell $1.40 to $50.15 a barrel on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average rose 0.2 percent. Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index rose 0.4 percent, and France’s CAC-40 fell less than 0.1 percent.