By Anna Hirtenstein 

U.S. stocks edged lower Thursday as investors weighed multiple risk factors after the number of Americans applying for new unemployment benefits rose slightly, holding steady at historically high levels.

The S&P 500 fell 0.3%, pointing to a further declines in U.S. equities after the broad market gauge dropped 2.4% Wednesday. The S&P that day hit its lowest level in almost two months after hopes for an additional coronavirus-spending package from the government dimmed.

The Dow Jones Industrial Average opened 0.3% lower, while the tech-heavy Nasdaq Composite Index retreated 0.4%.

Markets have grown jittery as a confluence of risk-factors came to the fore. Coronavirus infections continue to rise in many parts of the world, including the western U.S. The presidential election campaigning is fueling volatility: President Trump on Wednesday wouldn't commit to a peaceful transfer of power after the November vote. He predicted that the outcome would be decided by the Supreme Court, a reason he wants to quickly fill the vacancy left by the death of Justice Ruth Bader Ginsburg.

Federal Reserve officials on Wednesday stepped up calls for additional fiscal relief to bolster the economy. Chairman Jerome Powell and his colleagues said Congress and the White House, more than the Fed, had the power to hasten a faster recovery.

"America sneezes and the rest of the world catches a cold: if you're being told that the world's largest economy will not recover without stimulus and they can't agree on a stimulus, then that has to be a negative piece of news," said Tony Yarrow, a multiasset fund manager at Wise Funds. "The mood among investors is extremely pessimistic at the moment."

Mr. Powell is scheduled to offer congressional testimony in Capitol Hill for a third day this week, and will speak at 10 a.m. ET. He is expected to give an overview of the economy and monetary policy, which could provide clues into the central bank's actions going forward.

In bond markets, the yield on the benchmark 10-year Treasury edged down to 0.665%, from 0.676% on Wednesday.

The latest data on new jobless claims for the week ended Sept. 18 showed that the number of workers applying for jobless benefits rose to 870,000, compared with 866,000 last week.

"This week's rise in initial jobless claims will come as a surprise to the market," said Richard Flynn, U.K. managing director at Charles Schwab. "Despite some encouraging numbers in recent weeks, the level of weakness remains unprecedented, and the labor market's recovery will likely rely on further fiscal support from the government."

Daily new coronavirus cases in the U.S., which began to trend downward in mid-July, have also been going up since mid-September in a worrying sign for investors.

The timeline for a coronavirus vaccine being widely available also remains unclear: Dr. Anthony Fauci, the nation's top infectious-disease expert, expects to see data from Phase 3 clinical trials of some candidates indicating whether the vaccines are safe and effective by "November or December" of this year.

In contrast, Mr. Trump has repeatedly claimed that a vaccine will be available before the early November elections. On Wednesday, he appeared to criticize forthcoming Food and Drug Administration guidelines being developed around the release of a vaccine, adding to concerns that the health issue was being politicized.

Overseas, the pan-continental Stoxx Europe 600 dropped 0.7% as investors weighed the prospect of stringent measures being introduced in countries such as Germany, France and the U.K. following a rise in infections.

"We all assumed restrictions would be over by September, but it turns out that we're in September and we're being promised another six months of dislocation," said Mr. Yarrow. "Everyone's having to reset their expectations."

In Asia, major benchmark stock indexes closed lower as the negative sentiment spread overnight. The Shanghai Composite Index retreated 1.7% and Hong Kong's Hang Seng Index fell 1.8%.

The WSJ Dollar Index, which tracks the greenback against a basket of currencies, held steady at near its highest level since July.

Gold extended its decline for the fourth straight day, retreating 0.6% to trade at $1,857.50, the lowest level since July. The stronger greenback is weighing on gold because the precious metal is priced in dollars, making it more expensive, said Valentin Bissat, an economist at Mirabaud Asset Management.

Ahead of the opening bell in New York, Tesla fell 3.6%, extending its decline after a disappointing corporate presentation earlier this week stoked investors' concerns that its shares are overvalued.

Shares of Nikola, the electric-truck maker, plunged 11% premarket. Talks between the startup and several potential partners, including oil major BP, have reportedly stalled following allegations that it has misled investors.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

September 24, 2020 09:48 ET (13:48 GMT)

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