US stocks dropped on Thursday as an unexpected rise in weekly jobless claims exacerbated fears of a stalling economic recovery, a day after Treasury Secretary Steven Mnuchin dashed hopes for more fiscal aid before the election.
Initial claims for state unemployment benefits totaled a seasonally adjusted 898,000 for the week ended Oct. 10, compared to 845,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 825,000 applications in the latest week.
A separate report showed manufacturing activity in New York State fell more than expected in October.
Hopes of another round of fiscal aid to support the domestic economy helped fuel Wall Street's recent rally, bringing the S&P 500 and Nasdaq earlier this week to within 2% of their record closing highs on Sept. 2.
"It's been a kind of roller coaster as the market seems to be taking cues mostly from the stalled stimulus plan and concerns about fourth-quarter earnings if we don't get additional stimulus after the vote," said Art Hogan, chief market strategist at National Securities in New York.
With less than 20 days to Election Day, President Donald Trump and Democratic challenger Joe Biden will hold dueling prime-time town halls on Thursday instead of their second presidential debate, which was canceled after Trump declined to take part in a virtual matchup.
Focus is also on the quarterly earnings scorecard for corporate America, with expectations for third-quarter earnings improving to an 18.9% drop from a 25.0% tumble forecast on July 1, according to Refinitiv IBES data.
Morgan Stanley edged 0.2% higher after reporting a better-than-expected quarterly profit, winding up results from major U.S. lenders.
Walgreens Boots Alliance Inc gained 4.8% as the drugstore chain forecast profit to grow in single digits in 2021 after posting a better-than-expected fourth-quarter profit.
All major S&P sectors were down with energy stocks sliding 2.5% as oil prices tumbled 3% on worries about recovery in fuel demand.
At 9:42 a.m. ET, the Dow Jones Industrial Average was down 280.91 points, or 0.99%, at 28,233.09, the S&P 500 was down 34.40 points, or 0.99%, at 3,454.27. The Nasdaq Composite was down 128.91 points, or 1.10%, at 11,639.82.
Shares of drug developer Vertex Pharmaceuticals Inc sank 16.2% after it discontinued its trial of a protein deficiency disorder treatment.
Declining issues outnumbered advancers for a 6.91-to-1 ratio on the NYSE and a 5.08-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and no new low, while the Nasdaq recorded nine new highs and 14 new lows.
The article originally appeared on Reuters