The S&P 500 and the Dow Jones have hit a one-week low after a sharp climb over the past month as investors worried about a second wave of coronavirus infections and a grim forecast for the economy from the Federal Reserve.

Shares of airlines and cruise operators slumped on Thursday as a Reuters analysis showed new coronavirus cases rose in the United States after five weeks of declines.

The S&P 1500 airlines index tumbled 7.4 per cent while Norwegian Cruise Line Holdings Ltd and Royal Caribbean Cruises Ltd slumped 12.6 per cent and 9.0 per cent respectively.

Wall Street’s fear gauge, the CBOE volatility index, hit its highest level since May 15.

“The market has been rallying because they’re looking to 2021 and saying we’re going to get past this and then things will sort of get back to normal,” said Sean O’Hara, president of Pacer ETF Distributors in Malvern, Pennsylvania.

“One thing that really could change the trajectory here would be if we have a big bounce in a second wave. That’s the big fear.”

The easing of lockdowns and a massive stimulus program to help the economy bounce back quickly to pre-pandemic levels have been pivotal in the S&P 500 staging a stunning recovery from a deep, virus-induced sell-off.

The S&P 500 and the Dow Jones indexes ended lower on Wednesday after Fed Chair Jerome Powell acknowledged it could take years for the millions of people laid off due to COVID-19 to get back to work, even as he reiterated his promise to support the virus-hit economy.

“Chair (Jerome) Powell was pretty guarded and cautious and that’s spilling into market psychology today,” said Art Hogan, chief market strategist at National Securities in New York.

A Labor Department report showed about 1.54 million people applied for state unemployment benefits for the week ended June 6, roughly in line with estimates.

Boeing Co shed 7.8 per cent after its top supplier Spirit AeroSystems Holdings Inc announced a 21-day layoff for staff doing production and support work for Boeing’s 737 program. Spirit AeroSystems tumbled 8.2 per cent.

In early trading on Thursday, the Dow Jones Industrial Average was down 763.86 points, or 2.83 per cent, at 26,226.13, the S&P 500 was down 75.11 points, or 2.35 per cent, at 3,115.03. The Nasdaq Composite was down 183.63 points, or 1.83 per cent, at 9,836.71.

Shares of banks, which tend to benefit in a higher rate environment, slipped 4.8 per cent, extending losses after Fed policymakers expected key overnight interest rates to remainn near zero through at least 2022.

All S&P sectors were lower with energy, financials and real estate posting the steepest declines.

Online food delivery firm Grubhub Inc jumped 6.0 per cent after Europe’s Just Eat Takeaway NV agreed to buy its US peer in an all-stock deal for $US7.3 billion ($A10.5 billion).

Declining issues outnumbered advancers for a 16.47-to-1 ratio on the NYSE and a 10.61-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and no new low while the Nasdaq recorded nine new highs and four new lows.

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