Dow falls more than 5% as US sell-off accelerates

Traders work on the floor of at the closing bell of the Dow Industrial Average at the New York Stock Exchange on October 31, 2018. (Photo: Bryan R. Smith, AFP)
Traders work on the floor of at the closing bell of the Dow Industrial Average at the New York Stock Exchange on October 31, 2018. (Photo: Bryan R. Smith, AFP)

A sell-off on Wall Street accelerated after midday Thursday with stocks pulling back from record levels on rising worries about increasing coronavirus cases in some states.

The Dow Jones Industrial Average was down more than 1,400 points, or 5.2 percent at around 1645 GMT, falling to 25,584.80.

The broad-based S&P 500 slumped 4.3 percent to 3,052.48, while the tech-rich Nasdaq Composite Index shed 3.5 percent to 9,666.24, threatening a three-day streak of new records.

After weeks of focusing on the positive side of reopening the US economy, investors on Thursday shifted attention to rising coronavirus cases in some states that have reopened, including Texas and Arizona.

Treasury Secretary Steven Mnuchin said on CNBC the government would not waiver from its push to get businesses operating, saying "We can't shut down the economy again."

But investors fear rising case counts could depress economic activity even if authorities decline to resume the lockdowns.

"It's concerning that a lot of states are seeing a spike in rates," said LBBW's Karl Haeling. "It's hard to interpret whether that represents a real increase, or just the fact that more states are testing people now."

The Labor Department reported that another 1.54 million US workers filed for unemployment benefits last week, bringing the total initial claims since the shutdowns began in mid-March to 44.2 million, although some have returned to work.

The figure was lower than last week's jobless claims, but a gloomy reminder of the headwinds facing the US economy.

Federal Reserve Chief Jerome Powell on Wednesday highlighted the uncertainty of the outlook after the central bank signaled it expects to keep interest rates low for the next few years.

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