US STOCKS-Wall St drops after three-day surge as virus threat intensifies

* U.S. House debating $2 trillion aid bill
* Bank stocks tumble but set for best week since 2009
* Boeing set to snap four-day stellar rally
* Indexes tumble: Dow 4.06%, S&P 3.68%, Nasdaq 3.57%

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By Uday Sampath Kumar and Medha Singh
March 27 (Reuters) - Wall Street fell more than 3% on
Friday, following the S&P 500 and the Dow's best three-day run
in nearly a century, as fears about the economic damage from the
coronavirus pandemic returned to the forefront.
The United States on Thursday surpassed China as the country
with the most number of coronavirus cases and is expected to
become the epicenter of the outbreak. "We're not out of the woods yet on the health or economic
crisis," said Eddie Perkin, chief equity investment officer at
Eaton Vance in Boston.
"It would seem odd to me if the markets fully stabilize
before we get more clarity on the health front."
Unprecedented stimulus measures by the Federal Reserve and
the White House have set the S&P 500 .SPX for its best week in
over a decade, but it is still down 14% in March and on course
for its worst month since the height of the financial crisis.
The Dow Jones .DJI , briefly establishing a bull market
with its gains on Thursday, is on course for its biggest weekly
gain since 1938, largely helped by a stunning four-day rally for
Boeing Co BA.N .
But with growing fears of a deep global recession, traders
expect more wild swings in financial markets until there are
signs of new virus cases peaking and sweeping restrictions
placed on entire countries being lifted. A record 3 million surge in U.S. weekly jobless claims
offered the first glimpse of the extent of the economic hit from
the outbreak, which has forced several companies to shutter
operations and announce layoffs. "Big questions are starting to be answered, like how bad is
the spread of infections (and) how bad is the economic damage,"
said Neil Wilson, chief market analyst for Markets.com in
London.
"That is a recovery narrative, not panic, but if a recovery
is not as swift as hoped, equity markets will suffer another
hit."
The U.S. House of Representatives is widely expected to
clear a $2 trillion bill, aimed at flooding the country with
cash to support businesses and families affected by the
outbreak, after the Senate passed the proposal on
Thursday. At 10:29 a.m. ET the Dow Jones Industrial Average .DJI was
down 916.19 points, or 4.06%, at 21,635.98, the S&P 500 .SPX
was down 96.72 points, or 3.68%, at 2,533.35 and the Nasdaq
Composite .IXIC was down 278.50 points, or 3.57%, at 7,519.04.
Delta Airlines DAL.N , United Airlines UAL.O and American
Airlines AAL.O fell between 6% and 9% as U.S. Treasury
Secretary Steve Mnuchin said the aid designated for airlines in
the package was not a bailout and that taxpayers would need to
be compensated. Boeing shed 11% after gaining as much as 90% this week, as
Mnuchin said the planemaker had no intention of participating in
the package. The banking index .SPXBK fell 5.4%, tracking U.S. Treasury
yields, while oil majors Exxon Mobil XOM.N and Chevron Corp
CVX.N fell about 6%, tracking a drop in Brent crude LCOc1
prices.
Declining issues outnumbered advancers more than 8-to-1 on
the NYSE and 5-to-1 on the Nasdaq.
The S&P index recorded no new 52-week high and one new lows,
while the Nasdaq recorded three new highs and 15 new lows.