Virus, economic worries spook Wall Street

NEW YORK — 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 S&P 500 lost 0.6%, with three in four stocks within the index falling. The sharpest drops hit oil companies, airlines and other stocks whose fortunes are most closely tied to a reopening and strengthening economy. Treasury yields also sank.

The Dow Jones Industrial Average dropped 361.19 points, or 1.4%, to 25,706.09, while the 17.89 point fall for the S&P 500 to 3,152.05 was just its second loss in the last eight days.

Smaller stocks sank more. The Russell 2000 index of small-cap stocks lost 28.48, 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, or 0.5%, to 10,547.75, and hit another record.

“The broad equity market is navigating through a zone of uncertainty,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

“There are ample reasons for caution,” he said. “Clearly there’s uncertainty surrounding the impact and duration of this virus.”

Thursday’s headline economic report showed just over 1.3 million workers filed for unemployment last week, down from 1.4 million the prior week and from a peak of nearly 6.9 million in late March.

The improvements help validate investors’ earlier optimism that the economy can recover as states and other governments relax restrictions put in place to slow the pandemic. Such optimism helped the S&P 500 rally back to within 7% of its record, after earlier being down nearly 34%.

But investors are worried 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 reopenings, while others are ordering people arriving from hot spots to quarantine.