US STOCKS-Wall St lower on fears of new virus wave, Fed's cautious outlook

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* Airlines, cruise operators, casinos tumble
* Banks extend slide as Fed sees rates near zero until 2022
* Boeing supplier Spirit tumbles after announcing layoffs
* Indexes fall: Dow 2.83%, S&P 2.35%, Nasdaq 1.83%

(Updates to open)
By Medha Singh and Devik Jain
June 11 (Reuters) - The S&P 500 and the Dow Jones hit a
one-week low on Thursday, after a sharp climb over the past
month, as investors worried about a second wave of coronavirus
infections and a grim forecast for the economy from the Federal
Reserve.
Shares of airlines and cruise operators slumped on Thursday
as a Reuters analysis showed new coronavirus cases rose in the
United States after five weeks of declines.
The S&P 1500 airlines index .SPCOMAIR tumbled 7.4%, while
Norwegian Cruise Line Holdings Ltd NCLH.N and Royal Caribbean
Cruises Ltd RCL.N slumped 12.6% and 9.0%, respectively.
Wall Street's fear gauge, the CBOE volatility index .VIX ,
hit its highest level since May 15.
"The market has been rallying because they're looking to
2021 and saying we're going to get past this and then things
will sort of get back to normal," said Sean O'Hara, president of
Pacer ETF Distributors in Malvern, Pennsylvania.
"One thing that really could change the trajectory here
would be if we have a big bounce in a second wave. That's the
big fear."
The easing of lockdowns and a massive stimulus program to
help the economy bounce back quickly to pre-pandemic levels have
been pivotal in the S&P 500 .SPX staging a stunning recovery
from a deep, virus-induced selloff.
The S&P 500 .SPX and the Dow Jones .DJI indexes 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. "Chair (Jerome) Powell was pretty guarded and cautious and
that's spilling into market psychology today," said Art Hogan,
chief market strategist at National Securities in New York.
A Labor Department report showed about 1.54 million people
applied for state unemployment benefits for the week ended June
6, roughly in line with estimates. Boeing Co BA.N shed 7.8% 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 8.2%. At 10:01 a.m. ET, the Dow Jones Industrial Average .DJI
was down 763.86 points, or 2.83%, at 26,226.13, the S&P 500
.SPX was down 75.11 points, or 2.35%, at 3,115.03. The Nasdaq
Composite .IXIC was down 183.63 points, or 1.83%, at 9,836.71.
Shares of banks .SPXBK , which tend to benefit in a higher
rate environment, slipped 4.8%, extending losses after Fed
policymakers saw key overnight interest rates remaining near
zero through at least 2022. All S&P sectors were lower with energy .SPNY , financials
.SPSY and real estate .SPLRCR posting the steepest declines.
Online food delivery firm Grubhub Inc GRUB.N jumped 6%
after Europe's Just Eat Takeaway.com NV TKWY.AS agreed to buy
its U.S peer in an all-stock deal for $7.3 billion. Declining issues outnumbered advancers for a 16.47-to-1
ratio on the NYSE and a 10.61-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and no new low,
while the Nasdaq recorded nine new highs and four new lows.