Stocks Slide As Rising Case Count Overshadows Virus Vaccine Optimism

Global stocks slid Thursday as a recent rally sputtered, as vaccine hopes were overshadowed by fears of a coronavirus surge that threatens economic recovery.

"The near-certainty of a horrible few months ahead for the United States (and Europe) given current infection, hospitalisation and death rates, is dominating sentiment just at the moment," said National Australia Bank's Ray Attrill.

And the slow rollout of vaccines is also giving investors pause, said market analyst Joshua Mahony at online trading firm IG.

"Despite hopes that a vaccine will spark a rousing recovery in economic activity, the likeliness is that the virus will continue to stifle any such rebound owing to the gradual nature of any such rollout," he said in a note to clients.

The Dow and wider S&P 500 both ended in the red, losing 1.0 percent and tech stocks that have profited from lockdowns some of their recent gains.

A larger-than-expected drop in first-time applications for unemployment claims last week was not enough to buoy sentiment.

In European trading, London's benchmark FTSE 100 index shed 0.7 percent, hit also by official data showing the British economy slowing once more after exiting a record recession.

Frankfurt gave up 1.2 percent and Paris fell 1.5 percent as coronavirus cases continue to rise on the continent despite tougher restrictions.

Faced with the prospect of receding demand, oil prices retreated as well.

The mood across trading floors had been positive for much of the week after former vice president Joe Biden beat Donald Trump and US pharma giant Pfizer said its vaccine candidate was 90 percent effective in trials.

Hopes that a treatment for the killer disease will be rolled out before 2021 put a rocket under stocks such as airlines that have been battered for most of the year.

Analysts said massive central bank and government stimulus will help to maintain a level of positive market sentiment.

"Once we have made it through what is still bound to be a winter of despair for health care concerns, it could trigger the mother of all economic rebounds boosted by unprecedented policy support," said Axi strategist Stephen Innes.

Investors are also keeping tabs on developments in Washington as Trump refuses to concede last week's election, while launching legal challenges after claiming without evidence that there was massive voting fraud.

His stubbornness has fueled concerns about the transition to Biden and also led to questions about whether US lawmakers will be able to push through with their much-needed additional economic stimulus.