Stock market live Thursday: Dow drops nearly 7%, fear gauge spikes, back to bear market?

Stocks dropped on Thursday as fears over a possible second wave of coronavirus cases sent the major averages lower. The Dow plunged more than 1,500 points at its session low, registering a loss of 5.7%. The S&P 500 dropped more than 4.8%. Stocks most exposed to the economy’s reopening, such as retailers and cruise line operators, dragged markets lower.

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• Dow closed down 6.9% for its third straight negative day and its worst day since March 16
• Dow closed down 1861.82 points for its fourth worst point loss ever
• Dow is down 7.31% week to date, on pace for its worst week since March 20
• Dow is 37.96% above its March 23 low of 18,213.65
• S&P 500 closed down 5.89% for its third straight negative day and its worst day since March 16
• The S&P 500 is down 6.01% week to date, on pace for its worst week since March 20
• S&P 500 is 36.97% above its March 23 low of 2,191.86
• Sectors: 11 out of 11 sectors were negative today led by Energy down 9.45%
• The best performing sector today was Consumer Staples down 3.81%
• Nasdaq closed down 5.27% for its first negative day in five and its worst day since March 16
• NASDAQ is up 5.8% year to date
• Oil: West Texas Intermediate settled down 8.23% at $36.34 per barrel for its worst day since April 27
• Declining stocks outpaced Advancing stocks 2,928 to 95 or almost 31 to 1 on the NYSE —Francolla

The Dow had its worst day since March, shedding 1,862 points, or 6.9%, as investors grew increasingly concerned about a resurgence of the coronavirus. The broad-based sell-off dragged down nearly every category of stocks. The S&P 500 also dropped 5.9%, while the Nasdaq fell 5.3%. —Pound

With stocks plunging on Thursday, Boston Private Wealth CIO Shannon Saccocia said the leg lower was in large part thanks to the somber tone struck by Federal Reserve Chairman Jay Powell on Wednesday. “The Fed’s outlook yesterday was a bit of a reality check for the markets,” she said. “That takes the wind out of the sails of energy and consumer names, as a lot of this run up has been correlated with a robust resumption of consumer spending on the back of reopening, and the Fed seems to be indicating we will get a bigger bump from that in 2021. I think the idea of yield curve control and the Fed’s somber view of inflation expectations are weighing on financials – if the curve isn’t going to steepen, this burst of optimism around banks will wane a bit.” –Stevens

The market selloff has widened in the final hour of trade, and the Dow was down about 1830 points, or 6.8%. The S&P 500’s losses grew to 5.7%, while the Nasdaq dropped roughly 5.1%. Small caps underperformed their larger peers, with the Russell 2000 plunging 7.4%. —Pound

Oil prices moved lower on Thursday, pressured by oversupply concerns as well as fears over a second wave of coronavirus cases, which could weigh on demand. West Texas Intermediate slid 8.243%, or $3.26, to settle at $36.34 per barrel, in its worst daily performance since April 27. International benchmark Brent crude settled 7.6% lower at $38.55 per barrel. On Wednesday the Energy Information Administration said that for the week ending June 5 inventory rose to a record high. – Stevens

The Cboe Volatility Index, known as the VIX, jumped more than 38% to trade around 40.07, marking the first time the gauge has cross the 40 threshold since May 4. The VIX, which tracks the 30-day implied volatility of the S&P 500, is a popular measure of fear in the stock market. The VIX closed at a record high of 82.69 on March 16 during the coronavirus sell-off and has been trading around the 20s in the past month as the economic conditions improved.–Li

With roughly one hour left in the trading session, the Dow and S&P 500 were both on pace for their biggest one-day declines since March. The Dow traded nearly 1,700 points lower, or 6.3%. Boeing was the worst performer in the 30-stock index, down more than 14%. The S&P 500 was down more than 5%. The tech-heavy Nasdaq slid 4.8%.  —Imbert

David Trainer, CEO of research firm New Constructs, said Thursday’s sell-off is an opportunity for investors to add names that have been unfairly hit. “It’s time to buy the dip,” he said. “Now is the chance to pick up stocks at a discount. Many investors missed the melt up in stocks over the past few weeks. The market is fairly valued, in my opinion, so large pullbacks create opportunity for value investors,” he added. Trainer said that while the market could be choppy going forward, he’s not expecting a repeat of the “panic-driven selloff of March.” – Stevens

 CFRA’s Sam Stovall said it appears market sell off has further to go to the downside. “It could end up shaving 5% to 10 % off the June 8 peak,” said Stovall, chief investment strategist. The S&P hit a high of 3,233 that day. “We’ve been overbought for awhile and digesting gains would be natural,” he added. — Domm

Dan Deming, managing director at KKM Financial, said the S&P 500 could fall back to its 200-day moving average of 3,013 as concerns over the economy and the coronavirus persist. “A retest of the 200-day moving average is certainly a possibility. We’re not too far away from that,” he said. “That would probably be the first line in the sand as far if this is something a little bit more meaningful or is it the market just finding some equilibrium.” The S&P 500 closed back above its 200-day moving average on May 27 after the coronavirus-induced sell-off. —Imbert

“Fed chair Powell yesterday really reminded investors that there’s a huge, huge gap between the economic reality and the market reality. Just that reminder combined with a lot of the second wave headlines prompted an opportunity to take profits. A lot of weak hands bought the market at the very end of this rally anyway, so you are just seeing that tumble out now. The headlines about a potential second wave are the main cause but we were due anyway for a pullback. Stocks can’t go up forever,” Essaye told CNBC. —Li

Rough starts from energy stocks, travel stocks and banks drove the market sharply lower on Thursday morning. Here are some of the companies making headline moves:

Citigroup, Wells Fargo, JPMorgan — Bank stocks fell on Thursday as Treasury yields dipped and investors digested forecasts from the Federal Reserve. Shares of Citigroup fell 7.2%, while Wells Fargo dropped 6.9%.

United, American, Delta, Southwest — Airline stocks cratered on Thursday as investors shed riskier reopening plays on concerns about a second wave. United and American Airlines dropped more than 10%.

Read more movers here. —Pound

The S&P 500 had historically tended to fall in afternoon trading when it is down at least 2% at midday, according to a note from Bespoke Investment Group. That pattern held regardless of whether stocks were considered overbought, oversold or in-between as of the previous close, the note said, and stocks tend to end the day at the lows of the session. The index was down more than 4% as of 12:30 ET. —Pound

A whopping 33 stocks traded lower for every advancer at the New York Stock Exchange as the market sold off on concerns over a potential resurgence in coronavirus cases. Overall, just 85 NYSE-listed names traded higher while 2,861 declined. —Imbert

The sell-off accelerated in midday trading with the Dow tumbling about 1,300 points, or 4.9%, at its session low, on pace for its worst one-day decline since March 18 when it lost 6.30%. The S&P 500 dropped 4.08%, on track for its worst daily performance since April 1 when the equity benchmark dropped 4.41%. –Li

President Donald Trump went back on the attack against the Fed, tweeting Thursday that the central bank is “wrong so often” on its economic forecasts. The Fed on Wednesday predicted a 6.5% drop in GDP for 2020 followed by a 5% in gain in 2021. Ironically, the central bank’s outlook for the year ahead is consistent with an assertion in Trump’s tweet that the year will be “one of our best ever.” Trump has laid off the Fed in recent months following sharp interest rate cuts and aggressive rescue programs. – Cox

The Dow was on pace to post its biggest one-day loss since April 1 as traders grew more concerned of a resurgence in new coronavirus cases. The 30-stock Dow traded more than 1,100 points down, or 4.3%. The S&P 500 was down 3.6% and was headed for its longest losing streak since March. The Nasdaq Composite pulled back 2.8%. —Imbert

CNBC’s Jim Cramer said the market’s run higher in recent weeks wasn’t taking into consideration conditions on the ground in the U.S. “There’s just been a happiness trade that has been out of sync with everything, whether it be hot spots in Arizona, or whether it be unemployment, or whether it be the higher price of food,” Cramer said on “Squawk on the Street.” Cramer said investors need to closely watch the progression of Covid-19 cases, but cautioned against panicking over today’s market drop.  “I think you just kind of have to let it come down and see whether there’s anything left of the day traders after they have their margin calls,” he said. — Kevin Stankiewicz

U.S. equities hit their session lows around 11:00 am ET, as investors grew more worried about a second wave. The Dow Jones Industrial Average fell more than 1,000 points. The S&P 500 and Nasdaq fell 3.1% and 2.17%, respectively. — Fitzgerald

Oil prices were sharply lower on Thursday, pressured by a build in U.S. inventory, as well as by fears over a second wave of coronavirus cases. West Texas Intermediate crude futures dropped 7.45%, or $2.97, to trade at $36.63 per barrel, while international benchmark Brent crude traded 6.7% lower at $38.94. Data from the U.S. Energy Information Administration released Wednesday showed that for the week ending June 5, inventory rose by 5.7 million barrels to a record high of 538.1 million barrels. – Stevens

Barclays strategist Maneesh Deshpande hiked his S&P 500 price target to 2,800 from 2,500 citing “unprecedented stimulus” from the Federal Reserve. However, Deshpande’s new target is still about 10% below where the S&P 500 was trading at on Thursday. “We continue to believe that consensus expectations for a V-shaped recovery are too optimistic given that we believe that US GDP is unlikely to rebound to 2019 levels by 2021,” Deshpande wrote in a note to clients. He also noted that the “medical situation remains fluid.” —Imbert

Treasury Secretary Steven Mnuchin told “Squawk on the Street” Thursday that it would be too costly to shut down the American economy again to try to slow the spread of Covid-19 despite reports of higher hospitalizations in recent days. “We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage,” Mnuchin said in an interview with CNBC’s Jim Cramer. His comments came as Wall Street punished stocks on Thursday amid growing fears that a second wave of coronavirus cases in the United States could force governors to re-institute business closures. — Franck

The so-called stay-at-home trade bucked the broader market’s overall negative trend on Thursday amid growing concerns of a potential second wave of new coronavirus cases. Netflix and Amazon were up 2.2% and 0.6%, respectively, clawing back earlier losses. Zoom Video shares jumped more than 4%. —Imbert

Shares of national and regional banks dropped on Thursday as investors worried about a second waveand  its economic ramifications. Bond yields also ticked lower, which pressures banks’ net interest margins. Shares of the SPDR S&P Bank ETF (KBE) fell about 5%. JPMorgan and Bank of America both lost more than 4% while Wells Fargo and Citi Group dropped 5% apiece. The SPDR S&P Regional Bank ETF (KRE) also fell. — Fitzgerald 

Shares of Hertz, which has filed for bankruptcy, have moved wildly in the opening minutes of trading and currently down roughly 19%. Trading of Chesapeake, which has reportedly been considering bankruptcy, was briefly halted for volatility after the stock rapidly cut its losses following the opening bell. The beleaguered energy stock was down 4.4% when trading was halted. —Pound

• Bank of America raised its price target on Apple to $390 from $340.
• HSBC upgraded Apple to hold from reduce.
• KeyBanc downgraded Starbucks to sector weight from overweight.
• Bernstein downgraded Campbell Soup, General Mills, and J.M. Smucker to underperform from market perform.
• Jefferies upgraded Keurig Dr Pepper to buy from hold and added Procter & Gamble to the franchise list.
• BTIG initiated Uber and Lyft as buy.
• Wells Fargo raised its price target on Apple to $385 from $315.
• Oppenheimer initiated DraftKings as outperform.
• JPMorgan upgraded PulteGroup to overweight from neutral and downgraded DR Horton to neutral from overweight

Pro Subscribers read more here. —Bloom 

Investors shed riskier reopening plays on Thursday as concerns grew about a second wave of the deadly coroanvirus. Airlines and cruise operators are some of the most punished sectors. Delta and American Airlines dropped more than 8%. United Airlines and Alaska Air Group fell more than 9%. Southwest ticked 6% lower. Shares of cruise line Carnival fell 8% and Norwegian fell nearly 9%. Royal Caribbean Cruises dropped more than 6%. — Fitzgerald 

Retail stocks moved lower amid a broader market sell-off as fears of a second wave of coronavirus cases took hold. Investors shed stocks most exposed to the reopening theme, sending the SPDR S&P Retail ETF, which tracks the sector, lower. L Brands, Gap, Kohl’s, Nordstrom and Foot Locker all shed more than 8%. TJX Companies and Walgreens each traded more than 3% lower, while Target was down about 1%. – Stevens

The Dow Jones Industrial Average fell more than 800 points immediately after the opening bell Thursday morning as investors continued to grow more gloomy about the economic outlook and upticks in Covid-19 cases amid the U.S. reopening efforts. The S&P 500 traded down 2.6% and the Nasdaq Composite fell 2%. — Franck

Last week 1.54 million Americans filed for unemployment insurance, which marked the tenth straight week of a slowdown in new filers. By historical standards, however, the number remains high. Continuing claims, or those collecting benefits for at least two weeks, declined to 20.9 million, compared with the crisis peak of 24.9 million during the week of May 9. The report comes a week after the Bureau of Labor Statistics said that nonfarm payrolls increased by 2.5 million in May, though reporting errors have cast some doubt about how aggressive the recovery has been so far. Since the pandemic began, more than 44 million workers have filed claims. — Cox

U.S. weekly jobless claims totaled 1.542 million last week. First-time claims for unemployment insurance were expected to total 1.6 million last week, according to economists surveyed by Dow Jones. Continuing claims, a broader look at the total unemployed, decreased by 339,000 to 20.9 million. – Cox

Buyers are jumping into Treasurys as stocks sell off on a gloomy Fed outlook and fears of growing virus cases in some parts of America. The 10-year yield, at 0.69%, is back where it was before ADP’s surprise job gains last Wednesday. Yields move opposite to price. After the government’s jobs report Friday showed a gain of 2.5 million jobs, the yield ran all the way up to 0.956%. Traders say the market was reacting to the Fed’s announcement that it was going to keep a large quantitative easing program going for the foreseeable future. The Fed said it would continue buying at least the $80 billion a month in Treasurys it is now buying for the foreseeable future. That coupled with the Fed’s outlook for a long recovery set a sour tone. The market had also been building in a steepening trade, meaning a wider spread between short end and long end yields. The so-called steepening trade was on better jobs data but also because of market expectations that the Fed would announce a program to control the yield curve with targeted rates. It did not announce that program Wednesday, but Fed Chairman Jerome Powell said it was under consideration. – Domm

The volatile and risky stocks that have made headline moves in recent days were down sharply in premarket trading. Shares of bankrupt rental car company Hertz dropped 25% after losing nearly 40% on Wednesday. Chesapeake Energy, which has been reportedly considering filing for bankruptcy protection, slid more than 12% after a 29% plunge during the prior session. Shares of newly public electric vehicle company Nikola sank more than 11%, on the heels of an 18.5% fall on Wednesday. — Pound 

Target said Thursday that it’s raising its dividend by 3% to 68 cents from 66 cents. The new annualized dividend yield will be 2.27%, compared with 2.2% previously. The company said in May that during the first quarter digital sales surged 141% as consumers shopped online during the Covid-19 lockdown, although sales of higher-margin items like apparel dropped. Shares of the big-box retailer were down roughly 1% during premarket trading. For the year, the stock is down 6%. – Stevens

Companies expected to benefit from the economy reopening fell in premarket trading after data showed a spike in cases in states that started loosening restrictions. Airlines, cruise operators and brick and mortar retailers tumbled before the opening bell. Shares of American Airlines and Delta Air both dropped more than 12% in premarket trading. United Airlines fell 13%. Southwest and Alaska Air dropped 10% and 11%, respectively. Cruise ship company Carnival cratered nearly 12% and Norwegian and Royal Caribbean fell 14% and 13%, respectively. Physical retailers ticked lower as well with Michaels dropping 14% and Kohl’s and TJX Companies falling 9% and 3%, respectively. Nordstrom dropped 7% in premarket trading. The reopening trades have been leading the market higher recently but investors are now pivoting back to trusty technology darlings. — Fitzgerald

The Federal Reserve pointed to a protracted slowdown ahead and pledged to do what it can to help the economy recover from the coronavirus. While keeping short-term interest rates anchored near zero, the central bank also said Wednesday it will continue buying at least $120 billion of bonds a month. Fed officials estimate that GDP will fall 6.5% in 2020 then bounce back to a 5% gain next year and 3.5% in 2022. Chairman Jerome Powell said that the burden from the shutdown has impacted those at the bottom end of the economic spectrum, and the Fed will do what it can to help. Along with the bond purchases, the Fed has implemented a series of programs aimed at market functioning and lending to businesses in need. “We will continue to use those powers forcefully, actively and aggressively until we are convinced that we are solidly on the road to recovery,” Powell said. – Cox

U.S. coronavirus cases have surpassed 2 million as states begin to reopen their economies, which has led to fears of a second wave of cases. Texas, which was among the first wave of states to ease lockdown restrictions, has reported three straight days of record-breaking hospitalization numbers. Across the U.S., cases have gradually been rising since Memorial Day weekend. Global cases now stand at more than 7.36 million. – Stevens

Investors are looking to the release of the latest jobless claim numbers at 8:30 a.m. ET for a read on the state of the economy. Economists polled by Dow Jones are expecting 1.595 million claims, which would represent a slowdown in the number of new people filing. Data released last Thursday showed that 1.877 million people had filed claims in a sign that the worst is over for the coronavirus-related job crisis, although the number remains high by historical standards. Additionally, the number of continuing claims, which provides a clearer picture of how many Americans remain unemployed, continues to creep higher. Since March more than 42 million people have filed for unemployment insurance. – Stevens

U.S. stock index futures pointed to a sell-off at the start of trading on Thursday as fears over a second wave of coronavirus cases sent the major averages tumbling. The Dow Jones Industrial Average was slated to open 560 points lower for a loss of 2%. The S&P 500 was poised to drop 1.7%, while the Nasdaq Composite was set to shed 1.4%. Stocks sensitive to the economy’s reopening, which have been sharply higher in recent sessions, led the premarket declines.

The S&P 500 is on track for its third straight day of losses and is once again negative for the year. Earlier in the week the benchmark index briefly turned positive for 2020 before the rally took a breather. Still, the S&P 500 is now just 6% below its February record high. Meanwhile the Nasdaq Composite hit a new all-time high during Wednesday’s session, and closed above 10,000 for the first time on record as Big Tech continues to outperform. – Stevens 

– CNBC’s Yun Li, Jeff Cox, Michael Bloom, Fred Imbert and Patti Domm contributed reporting.

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