(AP) -- Major U.S. stock indexes gave up early gains and closed mostly lower Wednesday, extending the market's heavy losses for the week.
The benchmark S&P 500 fell for the fifth straight day after swinging between a 0.6% loss and 1.7% gain. Smaller company stocks bore the brunt of the selling. The bond market continued to flash warning signs as long-term Treasury yields fell further below short-term yields.
Worry about economic fallout from the virus outbreak that originated in China has fueled a sharp sell-off this week that's wiped out the market's gains for the year.
The virus continues to spread and threatens to hurt industrial production, consumer spending, and travel. More cases are being reported in Europe and the Middle East. Health officials in the U.S. have been warning Americans to prepare for the virus.
"The market is still digesting the full impact of what the coronavirus could mean for global GDP growth and, more importantly, on earnings growth for a lot of companies," said Nadia Lovell, U.S. equity strategist at J.P. Morgan Private Bank.
The S&P 500 index fell 0.4%. It's on track for its biggest monthly decline since May. The Dow Jones Industrial Average dropped 123.77 points, for a three-day loss of 2,034 points. A modest rally in technology stocks helped nudge the Nasdaq composite to a 0.2% gain.
Smaller company stocks fell the most. The Russell 2000 index lost 1.2%.
European markets were mostly higher and Asian markets fell.
A burst of morning buying had stocks on track for modest gains, but the rally mostly faded by the end of the day, reflecting ongoing concerns among investors about the new coronavirus.
The outbreak has now infected more than 81,000 people globally and continues spreading. Brazil has confirmed the first case in Latin America. Germany, France and Spain were among the European nations with growing caseloads. New cases are also being reported in several Middle Eastern nations.
U.S. cases currently total 57, and the White House has requested $2.5 billion for vaccine development, treatment and protective equipment. On Tuesday, U.S. health officials called on Americans to be prepared for the disease to spread in the United States.
Bond yields headed lower for much of the day, but then recovered mostly. The yield on the 10-year Treasury inched up to 1.34% from 1.33% late Tuesday. The yield on the 3-month Treasury bill edged up to 1.51%. The inversion in the yield between the 10-year and the 3-month Treasurys is a red flag for investors, because it has been a warning signal that has a fairly accurate track record of preceding the last seven recessions.
"The bond market is sending us some warning signals that we should pay attention to and that's what you see playing out in the market today," Lovell said.
Investors have been moving more money into bonds in the wake of the outbreak. Traders are concerned the global economy could slow down as the world's second-largest economy struggles to contain the outbreak.
"A slowdown definitely is on the horizon, but it's transitory," Lovell said. "I would expect economic growth to reaccelerate in the back half of the year as China starts to come online."
Energy companies led the selling Wednesday as the price of U.S. crude oil fell 2.3%.
Cruise operators continued falling amid persistent virus fears. Norwegian Cruise Line Holdings fell 7.9%, Royal Caribbean Cruises dropped 8.1% and Carnival slid 7.5%.
Other companies that depend on travelers also declined. Expedia lost 7.1%.
Technology stocks eked out a modest gain. The tech sector was among the worst hit by sell-offs this week as many of the companies rely on global sales and supply chains that could be stifled by the spreading outbreak. Microsoft rose 1.2% and Adobe rose 1%.
TJX, the parent of retailer TJ Maxx, surged 7.2% after beating Wall Street's fourth-quarter profit forecasts and raising its dividend.
Disney fell 3.8% a day after Bob Iger's surprise announcement that he will immediately step down as CEO of the giant entertainment company. Iger steered the company's absorption of big moneymakers, including Star Wars, Pixar, Marvel and Fox's entertainment businesses. He also oversaw the launch of the Disney Plus streaming video service.
Toll Brothers slid 14.6% after the homebuilder reported disappointing fiscal first-quarter profit. The poor results weighed on nearly all homebuilder stocks. D.R. Horton fell 2.6%.
A government report Wednesday showed that sales of new homes jumped 7.9% in January to the fastest pace in more than 12 years.
The S&P 500 index fell 11.82 points, or 0.4%, to 3,116.39. The Dow dropped 123.77 points, or 0.5%, to 26,957.59.
The Nasdaq gained 15.16 points, or 0.2%, to 8,980.77. The Russell 200 index of smaller company stocks dropped 19.14 points, or 1.2%, to 1,552.76.
Benchmark crude oil fell $1.17 to settle at $48.73 a barrel. Brent crude oil, the international standard, dropped $1.52 to close at $53.43 a barrel. Wholesale gasoline fell 8 cents to $1.45 per gallon. Heating oil declined 7 cents to $1.50 per gallon. Natural gas fell 3 cents to $1.82 per 1,000 cubic feet.
Gold fell $6.90 to $1,640.00 per ounce, silver fell 36 cents to $17.83 per ounce and copper fell 1 cent to $2.58 per pound.
The dollar rose to 110.22 Japanese yen from 110.12 yen on Tuesday. The euro strengthened to $1.0897 from $1.0881.