Dow drops 361 points as surging virus cases dim recovery hopes

Stocks slumped Thursday as concerns about another surge in coronavirus cases tempered optimism over a declining trend in layoffs.

The Dow Jones industrial average slid 361.19 points, or 1.4%, to 25,706.09.

Treasury yields fell while the price of gold hung close to its highest level since 2011 – a sign of continued caution in the market.

The Standard & Poor’s 500 dropped 0.6% to 3,152.05, with the sharpest drops hitting oil producers, banks, airlines and other stocks whose fortunes are most closely tied to a reopening and strengthening economy. It was just the second loss in the past eight days for the broad index.

The Nasdaq Composite notched another record, rising 0.5% to 10,547.75. Tech stocks held up better than the rest of the market as investors continue to bet they can keep growing almost regardless of the economy’s strength.

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U.S. stocks have recovered most of this year’s losses, helping to push up global prices, despite rising numbers of American virus infections that threaten to derail economic improvement. Investors have bought technology and other companies they expect to emerge stronger from the global downturn.

But optimism was kept in check Thursday after cases continued to surge despite a report that showed fewer workers are getting laid off across the country.

The U.S. has surpassed 3 million confirmed cases and 132,300 deaths, according to Johns Hopkins University data. Globally, there have been 12 million cases and almost 550,000 deaths. Texas and California reported their highest single-day death totals Wednesday.

Florida reported 120 deaths – almost 50% more than the previous one-day high of 83 in late April – as the state surpassed 4,000 deaths.

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Investors monitored fresh data on layoffs in the U.S., which have remained stuck at an elevated weekly pace above 1 million since the coronavirus erupted in March. That’s nearly double the pre-crisis record.

Though the weekly toll of job cuts has gradually dropped, the pace of improvement has essentially stalled as companies continue to shed workers. A resurgence of confirmed viral cases is threatening to derail what had looked like the start of an economic recovery.

About 1.3 million workers filed first time claims for unemployment insurance last week, the Labor Department said Thursday, down from 1.43 million claims in the prior week. That latest round of applications means 49.8 million Americans have made initial jobless benefits claims in just 16 weeks.

Economists point to a troubling slowdown in the pace of improvements, including moderating declines in the four-week average of jobless claims .

“The consistently elevated claims show a labor market struggling to maintain its recovery as coronavirus cases soar in parts of the U.S.,” Daniel Zhao, senior economist at Glassdoor, said in a note. “The virus is in the driver’s seat and we’re along for the ride until the current public health crisis is resolved.”

Walgreens Boots Alliance dropped 7.8% for one of the biggest losses in the S&P 500 after it said it lost $1.7 billion in the latest quarter as the pandemic kept its customers around the world at home.

Investor concerns about the economy helped push Treasury yields lower. The yield on the 10-year note, which tends to move with investors’ expectations for the economy and inflation, 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. After flipping between small gains and losses, gold for delivery in August dipped $16.80 to settle at $1,803.80.

Benchmark U.S. crude dropped $1.28 to settle at $39.62 per barrel.

In European stock markets, Germany’s DAX was virtually flat, while France’s CAC 40 fell 1.2%. The FTSE 100 in London lost 1.7% after the Treasury chief warned about the depth of the recession there, and more big retailers said they had to cut jobs.

The Shanghai Composite Index rose 1.4% and the Nikkei 225 in Tokyo added 0.4%. In Hong Kong, the Hang Seng gained 0.3% despite U.S.-Chinese tensions over a security law imposed on the territory.

Contributing: The Associated Press

This article originally appeared on USA TODAY: Dow drops 361 points as surging coronavirus cases dim recovery hopes