By Anna Hirtenstein and Michael Wursthorn 

U.S. stocks bobbed up and down Thursday in a volatile trading session, leaving the S&P 500 teetering on the edge of correction territory amid ongoing concerns around the coronavirus pandemic and a contentious presidential election.

The stock market has struggled to find direction after a stretch of volatility this month that has pulled the S&P 500 down more than 9% from its Sept. 2 closing record.

The S&P 500 was up 0.2% to 3243 in recent trading after swinging between modest gains and losses. It would need to close at or below 3222.76 to enter a correction, which would mark a 10% drop from its recent high.

The broad index briefly fell below that level Thursday morning following data showing hundreds of thousands of Americans continue to rely on jobless benefits. It was the latest evidence that the economic recovery from the coronavirus pandemic will be drawn-out, especially with cases on the rise and lawmakers deadlocked on how to proceed with further fiscal stimulus.

Stocks made a U-turn after the Commerce Department said home purchases reached a 14-year high, highlighting how the pandemic is reshaping life and economic activity.

They also got a boost from reassurances from Senate Majority Leader Mitch McConnell via Twitter that the winner of November's presidential election would be inaugurated as planned in January. The tweet appeared to be a response to President Trump's refusal to commit to a peaceful transition of power a day earlier.

Markets are rocky because investors have a lot to worry about, forcing them to reassess the value of stocks, said David Lefkowitz, an executive director at UBS Global Wealth Management's chief invesmtnet office. The S&P 500's flirtations with a correction is likely a reflection of the fact that investors don't expect further fiscal support before the election, he said.

"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," added Tony Yarrow, a multiasset fund manager at Wise Funds. "The mood among investors is extremely pessimistic at the moment."

And many Americans are expected to vote by mail, likely leading to a messy, contentious and drawn-out election process, said Mr. Lefkowitz.

On Thursday, the Dow Jones Industrial Average and the Nasdaq Composite swung alongside the S&P 500. The blue-chip index was recently down 51 points, while the tech-heavy Nasdaq added 0.7%.

Tech stocks in the S&P 500 rose 1.1%, helping to stabilize the broad index. Meanwhile, energy and health-care stocks notched losses, keeping a lid on a bigger upside move.

In bond markets, the yield on the benchmark 10-year Treasury edged down to 0.664%, from 0.676% 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, from 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."

The timeline for a coronavirus vaccine being widely available also remains unclear: Dr. Anthony Fauci, the nation's top infectious-disease expert, said he 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 November election. 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 1.1% 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.

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%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

September 24, 2020 11:58 ET (15:58 GMT)

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