US stocks rebounded Friday after fears about a new crop of coronavirus cases sparked the market’s worst selloff in three months.
The Dow Jones industrial average had by 3 p.m. climbed 319.87 points, or 1.27 percent, to 25,448.04, clawing back some of Thursday’s nearly 7 percent loss.
The S&P 500 also jumped as much as 2.8 percent in early trading but was recently up 0.88 percent, at 3,027.62. The tech-heavy Nasdaq lagged, posting an early gain of 2.9 percent that faded to 0.62 percent by the late afternoon, to 9,551.35.
The recovery came amid fears about rising coronavirus cases and hospitalizations in several states, raising fears about a return to the lockdowns that froze the US economy in March and April.
“The gains we are seeing today highlight the fact that a second wave still remains far from guaranteed, yet we are certainly likely to see volatility and market sensitivity pick up in the coming weeks as COVID cases roll in,” said Joshua Mahony, senior market analyst at IG.
It’s not unusual for stocks to bounce the day after a big selloff. For instance, the main exchange-traded fund tracking the S&P 500 has plunged at least 5 percent on 20 previous days since 1993 and then gained at least 1 percent the following day on 10 of those occasions, according to Quincy Krosby, chief market strategist for Prudential Financial.
But investors could dump shares going into the closing bell as they look for opportunities to capitalize on the overbought market, Krosby said. They’re also weighing concerns about the coronavirus’ resurgence spooking consumers, she said.
“The consumer is going to be much more careful with headlines suggesting that the virus has not gone into remission,” Krosby said.
Wall Street has nonetheless seized on hopes that the US economy will come roaring back from the virus-related lockdowns. Despite the selloff, the Dow ended Thursday about 38 percent above the low it reached in March as the pandemic roiled global markets.