Economic fears, virus trends drag most stocks lower

Most of Wall Street wilted Thursday on worries that the economy’s recent improvements may be set to fade as coronavirus cases keep climbing.

The Standard & Poor’s 500 index lost 0.6%, with 3 out of 4 stocks within the index falling. The sharpest drops hit oil companies, airlines and other firms whose fortunes are most closely tied to a reopening and strengthening economy. Treasury yields also sank in another sign of increased caution.

The Dow Jones industrial average dropped 361.19 points, or 1.4%, to 25,706.09; the 17.89-point fall for the S&P 500 to 3,152.05 was just its second loss in the last eight sessions.

Smaller stocks sank more than the rest of the market, which often happens when investors are downgrading their expectations for the economy. The Russell 2000 index of smallcap stocks lost 28.48 points, or 2%, to 1,398.92.

The Nasdaq composite was an outlier as investors continue to bet big tech-oriented stocks can keep growing almost regardless of the economy’s strength. It added 55.25 points, or 0.5%, to 10,547.75 and hit another record.

Thursday’s headline economic report showed that a little more than 1.3 million workers filed new unemployment claims last week. That is down from 1.4 million the prior week and from a peak of nearly 6.9 million in late March.

The U.S. unemployment rate is currently 11.1%.

Investors are worried that worsening infection levels across swaths of the U.S. South and West and in other global hot spots could derail the budding recovery. Some states are rolling back their reopenings, while others are ordering people arriving from hot spots to self-quarantine.

Thursday’s losses for stocks accelerated after Florida reported the largest daily increase in deaths yet from the pandemic, with its cumulative death toll topping 4,000.

Such concerns helped push Treasury yields lower. The yield on the 10-year note sank to 0.60% from 0.65% late Wednesday.

The price of gold also held above $1,800 per ounce. Gold tends to rise when investors are worried about the economy, and on Wednesday it touched its highest price since September 2011. Gold for delivery in August slipped $16.80 to settle at $1,803.80.

In the stock market, the sharpest losses hit companies whose profits tend to rise and fall most closely with the strength of the economy. Energy stocks dropped 4.9% for the biggest loss among the 11 sectors that make up the S&P 500. Exxon Mobil sank 4.1%, and ConocoPhillips fell 6.6%. Benchmark U.S. crude dropped $1.28 to $39.62 per barrel.

Companies across the country are preparing to report second-quarter results in coming weeks, and forecasts are uniformly dismal.

Stocks in overseas markets were mixed, though China continued its huge run. Stocks in Shanghai added an additional 1.4%.