US STOCKS-Wall St hammered by fears of spurt in virus infections, economic worries

(For a live blog on the U.S. stock market, click LIVE/ or
type LIVE/ in a news window)
* Banks extend slide as Fed sees rates near zero until 2022
* Airlines, cruise operators, casinos fall
* Boeing supplier Spirit drops
* Indexes fall: Dow 5.52%, S&P 4.61%, Nasdaq 3.94%

(Updates to early afternoon)
By Medha Singh and Devik Jain
June 11 (Reuters) - U.S. stocks slumped on Thursday with the
Dow shedding over 5% and the index on track for its sharpest
one-day decline since March 18, as investors fretted over a
resurgence in coronavirus infections and a grim economic outlook
from the Federal Reserve.
The S&P 500 .DJI and the Dow Jones .DJI were set to wipe
off most of their gains made this month, and the tech-heavy
Nasdaq .IXIC tumbled 3.9% as it came off four consecutive
sessions of record highs.
New coronavirus cases rose slightly in the United States
after five weeks of declines, only a part of which is due to
higher testing, a Reuters analysis showed. Wall Street's fear gauge, the CBOE volatility index .VIX ,
jumped 8.4 points to 36.08, on track for its biggest daily point
gain since March 16.
The easing of lockdowns and a massive stimulus program to
help the economy bounce back quickly to pre-pandemic levels have
been pivotal in helping the three main indexes recover about 40%
from a deep, virus-induced selloff.
"There's a possibility that new COVID-19 cases may reappear
which could set the economy back at least for a period of time,"
said Michael Sheldon, chief investment officer of RDM Financial
Group in Westport, Connecticut.
"Today's decline is a setback for the market and it could
certainly be more choppy over the near term."
The S&P 500 and the Dow 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. A Labor Department report on Thursday showed about 1.54
million people applied for state unemployment benefits for the
week ended June 6, roughly in line with estimates. "We're actually going to have a W-shaped recovery," said
Chad Oviatt, director of investment management for Huntington
Private Bank in Columbus, Ohio. "Markets are dealing with the
fact that we now have an elongated recovery period."
All major S&P sectors were deep in the red with financial
.SPSY , energy .SPNY and material .SPLRCM sectors, that
track economic growth, posting the biggest declines.
Boeing Co BA.N shed 11.9% after its top supplier Spirit
AeroSystems Holdings Inc SPR.N announced a 21-day layoff for
staff doing production and support work for Boeing's 737
program. Spirit AeroSystems tumbled 15.1%. At 12:57 p.m. ET, the Dow Jones Industrial Average .DJI
was down 1,489.12 points, or 5.52%, at 25,500.87, the S&P 500
.SPX was down 147.21 points, or 4.61%, at 3,042.93. The Nasdaq
Composite .IXIC was down 394.51 points, or 3.94%, at 9,625.83.
Shares of banks .SPXBK , which tend to benefit in a higher
rate environment, slipped 7.8%, extending losses after Fed
policymakers saw key overnight interest rates remaining near
zero through at least 2022. Declining issues outnumbered advancers 17.12-to-1 on the
NYSE and 13.80-to-1 on the Nasdaq.
Underscoring Wall Street's momentum in recent months, no
stock on the S&P 500 hit a new low on Thursday, even as the
stock markets tanked. The Nasdaq recorded 18 new highs and seven
new lows.