(Reuters) – The S&P 500 and the Dow Jones hit a one-week low on Thursday, after a sharp climb over the past month, as investors worried about a second wave of coronavirus infections and a grim forecast for the economy from the Federal Reserve.
Traders wear masks as they work on the floor of the New York Stock Exchange in response to the outbreak of the coronavirus disease (COVID19) in the Manhattan borough of New York, U.S., May 27, 2020. REUTERS/Lucas Jackson
Shares of airlines and cruise operators slumped on Thursday as a Reuters analysis showed new coronavirus cases rose in the United States after five weeks of declines.
Wall Street’s fear gauge, the CBOE volatility index , hit its highest level since May 15.
“The market has been rallying because they’re looking to 2021 and saying we’re going to get past this and then things will sort of get back to normal,” said Sean O’Hara, president of Pacer ETF Distributors in Malvern, Pennsylvania.
“One thing that really could change the trajectory here would be if we have a big bounce in a second wave. That’s the big fear.”
The easing of lockdowns and a massive stimulus program to help the economy bounce back quickly to pre-pandemic levels have been pivotal in the S&P 500 .SPX staging a stunning recovery from a deep, virus-induced selloff.
The S&P 500 .SPX and the Dow Jones .DJI indexes ended lower on Wednesday after Fed Chair Jerome Powell acknowledged it could take years for the millions of people laid off due to COVID-19, to get back to work, even as he reiterated his promise to support the virus-hit economy.
“Chair (Jerome) Powell was pretty guarded and cautious and that’s spilling into market psychology today,” said Art Hogan, chief market strategist at National Securities in New York.
A Labor Department report showed about 1.54 million people applied for state unemployment benefits for the week ended June 6, roughly in line with estimates.
Boeing Co (BA.N) shed 7.8% after its top supplier Spirit AeroSystems Holdings Inc (SPR.N) announced a 21-day layoff for staff doing production and support work for Boeing’s 737 program. Spirit AeroSystems tumbled 8.2%.
At 10:01 a.m. ET, the Dow Jones Industrial Average .DJI was down 763.86 points, or 2.83%, at 26,226.13, the S&P 500 .SPX was down 75.11 points, or 2.35%, at 3,115.03. The Nasdaq Composite .IXIC was down 183.63 points, or 1.83%, at 9,836.71.
Shares of banks .SPXBK, which tend to benefit in a higher rate environment, slipped 4.8%, extending losses after Fed policymakers saw key overnight interest rates remaining near zero through at least 2022.
All S&P sectors were lower with energy .SPNY, financials .SPSY and real estate .SPLRCR posting the steepest declines.
Declining issues outnumbered advancers for a 16.47-to-1 ratio on the NYSE and a 10.61-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and no new low, while the Nasdaq recorded nine new highs and four new lows.
Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Uttaresh.V and Shounak Dasgupta
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