(AP) -- Financial companies led an early slide for stocks on Wall Street Friday after the Federal Reserve ordered many of the nation's biggest banks to suspend buybacks of their stock and cap dividend payments for several months.
The S&P 500 was down 1.6%, giving up all of its gains after a rally the day before. The index is on pace for a weekly loss. Communications and technology stocks also dragged the market lower. Only utilities and shares in household goods makers were higher in the early going. Energy stocks fell along with the price of crude oil. Bond yields were mixed.
The selling this week follows a surge in the number of confirmed new coronavirus cases, a trend that has undercut the optimism for an economic turnaround that helped drive a rebound for stocks for most of the past three months. Investors are now worried that the reopening of businesses that had been shut down due to the outbreak could be set back by the rise in cases, dimming the hopes for a relatively quick economic recovery.
The Dow Jones Industrial Average was down 469 points, or 1.8%, to 25,275. The Nasdaq, which hit an all-time high earlier this week, slid 1.7%. The Russell 2000 index of small company stocks was off 1.3%.
Despite the pullback this week, the benchmark S&P 500 index is on pace for its best quarter since the fourth quarter of 1998.
Markets have been mostly rallying since April on hopes that U.S. states and regions around the world could continue to lift the spring lockdowns put in place to slow the spread of the coronavirus. But signs of a resurgence in the coronavirus outbreak is stoking worries that the reopening of businesses may be interrupted, delaying the economy's recovery.
The number of confirmed new coronavirus cases per day in the U.S. has hit an all-time high of 40,000, eclipsing the mark set during the deadliest stretch in late April. Deaths and hospitalizations have been rising in parts of the country, especially in the South and West. The resurgence in the virus has already led some governors to backtrack or at least pause the reopenings of their states.
Financial sector stocks took the heaviest losses in morning trading Friday a day after the Fed ordered 34 of the nation's biggest banks to suspend buybacks of their own stock and cap dividend payments until Sept. 30 so they can shore up defenses in the event of a potentially damaging recession.
Capital One Financial fell 7.8%, Goldman Sachs dropped 6.7% and JPMorgan was down 4.3%. The announcement came as part of the Fed's annual "stress tests," which showed that in a worst-case scenario involving the U.S. economy being ravaged by the pandemic, the banks would collectively lose roughly $700 billion.
The central bank and other regulators also announced that they would ease rules that limit the ability of banks to invest in hedge funds and some other areas. The change could help to boost bank profits after central banks cut interest rates to almost zero in response to the coronavirus pandemic.
Traders also dumped shares in Nike after the athletic apparel maker reported a big loss as most of its stores were forced to close. The stock slid 4.5%.
Bond yields were mixed. The yield on the 10-year Treasury note slipped to 0.66% from 0.67%. The yield tends to move with investors' expectations for the economy and inflation.
In energy markets, benchmark U.S. crude was down 1.4% to $38.17 a barrel. Brent crude, the price standard for international oils, was down 0.5% to $40.91 a barrel.
Major indexes in Europe were mostly higher. The DAX in Germany added 0.4%, while the CAC 40 in France rose 1.1%. The FTSE 100 in London was up 1.3%. Markets in Asia finished mostly higher.