By Avantika Chilkoti and Alexander Osipovich 

U.S. stocks abruptly turned lower Friday after Apple said it is closing some stores in Florida, Arizona and other states due to a rise in coronavirus cases, stoking fears of another lockdown.

The Dow Jones Industrial Average fell 123 points, or 0.5%, in afternoon trading. It had been up more than 300 points after the opening bell.

The S&P 500 dropped 0.3%, while the tech-heavy Nasdaq Composite was down less than 0.1%.

All three indexes are still on track for weekly gains of at least 1%, fueled by central-bank stimulus efforts and cautious optimism that the economy is recovering from the worst fallout of the pandemic.

The market has been sensitive to any indications that a second wave of infections is under way, out of fear that it could lead to new lockdowns, reversing the trend toward reopening the U.S. economy that has lifted the stock market in recent weeks.

Apple said Friday that it is temporarily shutting 11 stores across Florida, Arizona, North Carolina and South Carolina, following spikes in Covid-19 infections. The market sold off sharply on the news, with the Dow at one point swinging more than 600 points off its morning high.

Earlier in the week, investors had been cheered by a string of economic data suggesting that the U.S. economy is recovering, with retail sales rebounding and jobless claims easing.

"The things you saw in March -- the panic and forced selling -- all seem to have faded, so it's a bit more of a normal market, though a fragile one," said Jonas Golterman, senior markets economist at Capital Economics. "The ingrained reflex which we have had in the past 10 years is, we have to buy the dip, and that usually works out."

Early coronavirus testing data from U.S. states and cities, including Minnesota, where the police killing of George Floyd sparked global protests, suggest recent mass gatherings haven't led to a marked uptick in new cases.

New cases in Florida, Arizona and California have hit daily record highs in recent days, but authorities have been reluctant to put lockdown measures back in place. Authorities in California are requiring residents to wear face masks in high-risk settings. Investors have cheered signs that the U.S. economy is reopening, allowing people to return to work and business activity to pick up.

"At the moment, people just seemed very focused on the strength of the recovery, which is to be expected given the strength of the shutdown," said Lyn Graham-Taylor, fixed-income strategist at Rabobank. "Through the summer, the economic data will be mechanically good just because it's going off such a low base, so it will take time to find out what the economic scarring is."

Markets have also gotten a boost from the stimulus efforts of central banks, with the U.S. Federal Reserve, the Bank of England and the European Central Bank all stepping up efforts in recent weeks to buy bonds and inject money into their economies to alleviate the impact of the pandemic.

Some analysts cited fear of missing out as another driver behind this week's gains.

"We suspect there are a lot of people who sold at the bottom, and now they have regret and remorse over not buying sooner," said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute.

Potentially adding to volatility on Friday was quadruple witching, which occurs four times a year and refers to the day that options and futures on both indexes and stocks expire at the same time. That tends to cause heavy trading volume as traders adjust expiring positions.

Ten of the S&P 500's 11 sectors were negative Friday. Financials, real estate and industrials were among the worst-performing sectors, while health care was the only sector in positive territory.

Shares of Apple dropped 1.5%. The stock had hit a record intraday high in the morning before the news of its store closures.

Shares of Marathon Petroleum gained 2.7% after The Wall Street Journal reported that the company is in discussions with potential buyers of its Speedway gas-station unit.

Shares of AMC Entertainment fell 2.4% in a volatile day of trading. The cinema chain reported plans late Thursday to reopen most of its movie theaters in July, sending its stock up. But shares turned lower after the company said it would require moviegoers to wear masks, a reversal of its earlier stance.

CarMax shares tumbled 6.8% after the auto retailer reported that its profit for the last quarter contracted sharply amid the pandemic.

Oil prices rose to a three-month high. New York crude futures climbed 2.3% to settle at $39.75. New data showed a further decline in the count of U.S. oil rigs, a bullish sign for the energy markets as it shows oil drillers are reining in production.

Overseas, the pan-continental Stoxx Europe 600 climbed 0.6%. Most major Asian markets closed higher. The Shanghai Composite rallied 1%.

The yield on the 10-year Treasury note ticked up to 0.699%, up from 0.693% Thursday. Yields move in the opposite direction from prices.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Alexander Osipovich at alexander.osipovich@dowjones.com

(END) Dow Jones Newswires

June 19, 2020 15:29 ET (19:29 GMT)

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