US STOCKS-Wall St slumps after three-day rally as virus threat intensifies

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* U.S. House debating $2 trillion aid bill
* Bank stocks slide but set for best week since 2009
* Boeing set to snap four-day stellar rally
* Indexes fall: Dow 2.64%, S&P 2.35%, Nasdaq 2.42%

(Updates to late morning, adds comment)
By Uday Sampath Kumar and Medha Singh
March 27 (Reuters) - Doubts about the fate of the U.S.
economy in the face of the coronavirus hammered Wall Street
again on Friday, halting its best three-day bounce in almost a
century as the number of cases across the country skyrocketed.
The United States surpassed China as the nation with the
most number of COVID-19 cases, putting more pressure on
lawmakers to flood the country with cash to support businesses
and families. "We have still not fully understood the degree of the
economic impact," said Massud Ghaussy, senior analyst at Nasdaq
IR Intelligence in New York.
"Currently, from a policymaker's perspective, it's a
relative balance between managing the spread of the virus and
opening the economy."
The U.S. House of Representatives is widely expected to
clear a $2 trillion economic rescue package after the Senate
passed the proposal on Thursday. The stimulus bill and unprecedented policy easing by the
Federal Reserve 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 pace for
its worst month since the height of the financial crisis.
The Dow Jones .DJI , briefly establishing a bull market 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 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. "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."
At 11:18 a.m. ET the Dow Jones Industrial Average .DJI was
down 595.76 points, or 2.64%, at 21,956.41, the S&P 500 .SPX
was down 61.81 points, or 2.35%, at 2,568.26 and the Nasdaq
Composite .IXIC was down 188.82 points, or 2.42%, at 7,608.72.
Delta Airlines DAL.N , United Airlines UAL.O and American
Airlines AAL.O fell between 4% and 8% 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 10% 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%, tracking U.S. Treasury
yields, while oil majors Exxon Mobil XOM.N and Chevron Corp
CVX.N fell about 6%, following a drop in oil prices.
Declining issues outnumbered advancers for a 4.58-to-1 ratio
on the NYSE and 3.63-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and one new low,
while the Nasdaq recorded four new highs and 19 new lows.