Reuters

U.S. stocks dropped on Monday after a spike in new coronavirus cases in China and parts of the United States dampened hopes of a swift economic recovery that had driven a sharp rise in Wall Street’s main indexes over the past month.

Battered shares of U.S. airlines, casino operators and cruise operators slipped after attempting a rebound in recent weeks. Norwegian Cruise Line Holdings Ltd and Wynn Resorts fell 5.4% and 1.9%. The S&P 1500 airlines lost 2.8%.

Beijing reinstated curbs after an unexpected spike in cases, while the United States saw a record number of new infections and hospitalizations in more states, including Florida and Texas.

The CBOE volatility index , a gauge of investor anxiety, eased after hitting its highest level since April 22.

“When we see a pullback like today, it’s just the enthusiasm dying down a little bit and people waiting to get a better understanding on this increase in infection rates,” Anthony Denier, chief executive officer of online broker Webull Financial LLC in New York.

Trillions of dollars in fiscal and monetary stimulus along with easing of restrictions had lifted the S&P 500 earlier last week as much as 47.5% from the pandemic low in March and helped the tech-heavy Nasdaq confirm a bull market.

But, a dismal economic outlook from the U.S. Federal Reserve and jitters over a resurgence in coronavirus cases sent the Wall Street’s main indexes for their worst week since March.

“The selloff since last week’s high is a reminder that we are not out of the woods yet. We expect a range-bound, choppy market for some time,” said David Bahnsen, chief investment officer, The Bahnsen Group, based in Newport Beach, California.

The S&P 500 index opened below its closely watched 200-day moving average of 3,014.41 points. It is also flirting with the psychologically important level of 3,000 points.

The benchmark index fell as much as 2.5% in early trading.

At 11:15 a.m. ET, the Dow Jones Industrial Average was down 274.09 points, or 1.07%, at 25,331.45, the S&P 500 was down 22.58 points, or 0.74%, at 3,018.73. The Nasdaq Composite was down 21.99 points, or 0.23%, at 9,566.82.

All major S&P sectors were lower with the economically-sensitive energy and healthcare posting the biggest percentage declines.

Beginning Tuesday, investors will focus on Fed Chair Jerome Powell’s two-day congressional testimony on the monetary policy report.

United Airlines said it is pledging its MileagePlus frequent flyer program for a new $5 billion loan aimed at further buffering its liquidity, even as its cash burn rate slows thanks to a steady improvement in demand.

Moderna Inc rose 3.1% after a report said Israel is in advanced talks with the drug developer to buy its coronavirus vaccine.

Declining issues outnumbered advancers for a 2.33-to-1 ratio on the NYSE and for a 1.30-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and no new low, while the Nasdaq recorded 27 new highs and 10 new lows.