By Avantika Chilkoti and Alexander Osipovich
The Dow Jones Industrial Average dropped about 250 points Thursday on concerns about the containment of the coronavirus outbreak and its potential economic impact.
The blue-chip index fell 271 points, or 0.9%, in midday trading. The S&P 500 dropped 0.9%, while the Nasdaq Composite declined 1.3%. All three indexes have posted double-digit gains over the past year and set repeated highs in recent sessions.
China has stepped up efforts to limit the economic fallout of the viral outbreak by lowering both short- and long-term lending rates this week. The central bank also plans to offer credit support to businesses hurt by the epidemic, while the government earlier in the week pledged other forms of assistance including technological aid in bolstering supply chains.
Despite those steps, investors remain concerned about the extent of the damage to the economy.
"People are saying, 'Wait a minute, is China going to get back to business as quickly as we thought?'" said David Lafferty, chief market strategist at Natixis Investment Managers.
Although fourth-quarter earnings for companies around the world have generally been viewed as better than or in line with expectations, forecasts for 2020 are being tempered by the impact of the coronavirus outbreak.
Prices for gold and U.S. government bonds rose as investors bought assets seen as havens. Gold futures were up 0.8% to $1,624.40 a troy ounce, trading at the highest level in about seven years. The yield on the 10-year U.S. Treasury note fell to 1.512%, from 1.569% on Wednesday. Bond yields fall as prices rise.
Fresh data from the Labor Department showed the number of Americans applying for first-time unemployment benefits rose slightly last week, but remained at a historically low level. Initial jobless claims rose by 4,000 in the week ended Feb. 15 to a seasonally adjusted 210,000, in line with economists' expectations.
Oil prices, meanwhile, extended a recent rebound, climbing for the sixth time in seven days after weekly inventory figures showed U.S. crude stockpiles fell less than expected last week. U.S. crude futures rallied 1.6% to $54.13 a barrel, heading for a nearly one-month high and trimming some of their recent slide.
In corporate news, shares of E*Trade Financial rallied 24% after Morgan Stanley said it is buying the company in a $13 billion deal. Shares in Morgan Stanley dropped 3.8%.
Shares in L Brands gained 0.6% after The Wall Street Journal reported that the company is near a deal to sell control of Victoria's Secret to a private-equity firm in a transaction that values the lingerie brand at about $1.1 billion.
Marathon Petroleum rallied 3.8% after Bloomberg News reported that Seven & I Holdings, the Japanese company that owns 7-Eleven, is in talks to acquire the company's Speedway gas stations for about $22 billion.
Overseas, the pan-continental Stoxx Europe 600 index sank 0.9%. Earlier, the Shanghai Composite Index closed up 1.8%, while Hong Kong's benchmark Hang Seng Index lost 0.2%.
Australia's equity benchmark S&P/ASX 200 index, meanwhile, closed at a record for a second straight day, propelled 0.3% higher on the back of strong corporate earnings.
In Asia, the Korean won lost over 1% against the U.S. dollar after the number of new coronavirus cases surged to 31, bringing the total number of those infected in the country to 82.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Alexander Osipovich at email@example.com