Wall Street slips as surging virus cases dent recovery hopes; Dow falls 1%

US stock indexes fell in choppy trading on Thursday as fears of another lockdown to contain a surge in coronavirus cases overshadowed data pointing to a declining trend in weekly jobless claims.

The Labor Department's most timely data on the economy showed 1.31 million Americans filed for state unemployment benefits in the latest week, down from 1.43 million in the previous week.
 

However, the labor market remains fragile as the United States reported more than 60,000 new Covid-19 infections on Wednesday, setting a single-day global record.

"We are reaching levels of unemployment that are likely to persist until a more true reopening can occur, either with a vaccine, novel treatment, or time," said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.

A batch of upbeat economic data including the record pace of job additions in June has underscored that the stimulus-fueled domestic economy was on the path to recovery.

The benchmark S&P 500 has risen more than 40 per cent from its March lows and is now about 7 per cent below its February record high.

The three main indexes charged ahead in the final hour of trading on Wednesday, with Nasdaq logging its fourth record closing high this month, powered by technology stocks.

At 10:54 a.m. ET, the Dow Jones Industrial Average was down 346.80 points, or 1.33 per cent, at 25,720.48, the S&P 500 was down 27.98 points, or 0.88 per cent, at 3,141.96, and the Nasdaq Composite was down 26.10 points, or 0.25 per cent, at 10,466.40.

All the 11 major S&P sectors were trading lower, led by financials and industrials.

Cisco Systems Inc rose 2.3 per cent as Morgan Stanley upgraded its rating on the network gear maker's stock to "overweight".

Walgreens Boots Alliance Inc fell 9.1 per cent after it reported a quarterly loss compared with a profit a year earlier, hurt by non-cash impairment charges of $2 billion as Covid-19 disrupted business at its Boots UK division.

The second-quarter earnings season is expected to begin in earnest next week. Analysts expect profits for S&P 500 companies to plunge about 44 per cent, the steepest drop since the 2008 financial crisis, according to IBES Refinitiv data.

Declining issues outnumbered advancers for a 3.18-to-1 ratio on the NYSE and a 2.88-to-1 ratio on the Nasdaq.

The S&P index recorded 30 new 52-week highs and one new low, while the Nasdaq recorded 102 new highs and 14 new lows.