Stocks fell Thursday and are down significantly in the past two weeks. A second wave of coronavirus infections continues to spark fear in markets, as the S&P 500 is roughly halfway down towards a correction.
All three major U.S. indices fell with the S&P 500 down much as 1.7%. The 10 year treasury yield slipped to 0.62%, as investors moved into safety. Yields fall when prices rise. Crude oil did rise 3% to $26 a barrel, but that did not calm investor sentiment.
The S&P 500 is now down about 5% since the index hit 2,940 on April 29. That was the highest level it had reached since hitting its low on March 23. A correction is a move down by at least 10%. And in just three days the 10 year treasury yield is down 10 basis points.
Cyclical sectors were losing more than the broader market was — industrials and consumer discretionary stocks were among the big losers. Even with oil prices rising, the Energy Select SPDR ETF (XLE) - Get Report fell 2.6%, as bearishness on an economic recovery sets in, especially after Federal Reserve Chairman Jerome Powell said Wednesday that the recovery was not looking exactly like a V-shaped one.
The big fear: premature state reopenings could lead to a significant reacceleration in virus cases.
“With certain states beginning the opening-up process in May, we may see further spread of the coronavirus in the near future,” wrote strategists at Commonwealth Financial Network in a note. "Ultimately, if efforts to combat the spread of the coronavirus meet any significant headwinds, further market volatility is likely. As such, we are keeping the overall market risk indicator at a red light.”
A secondary source of poor market sentiment was the jobless figures. Weekly jobless claims were 2.9 million, versus economists estimates of 2.5 million.