Dow drops nearly 300 points, but notches best month in 33 years

Stocks fell sharply on Thursday, the last day of April, as another round of dismal economic data led investors to trim some profits while the market wrapped up its best month in decades. 

The Dow Jones Industrial Average closed 288.14 points lower, or 1.2%, at 24,345.72. The S&P 500 slid 0.9% to 2,912.43. The Nasdaq Composite fell 0.3% to 8,889.55.

The Labor Department said another 3.84 million Americans filed for unemployment benefits last week, bringing the six-week total to more than 30 million. U.S. consumer spending also dropped 7.5% in March on a year-over-year basis.

The sharp rise in jobless claims and the precipitous drop in consumer spending come as businesses are forced to shut down and consumers stay home amid the coronavirus pandemic.

Stocks were also under pressure Thursday after the European Central Bank refrained from increasing its emergency asset purchase program.

Bank stocks were among the biggest laggards on Wall Street. Bank of America slid nearly 3% while Citigroup fell 3.4%. JPMorgan Chase slid 2.2%.

Despite Thursday's losses, the major averages notched their best monthly performances in decades. 

The S&P 500 posted its third-largest monthly gain since World War II, surging 12.7% in April. It was also its biggest one-month gain since 1987. The Dow had its fourth-largest post-war monthly rally with an 11.1% gain. The Dow also had its best month in 33 years.  The Nasdaq surged 15.5% in April, its biggest monthly gain since June 2000.

"There's a gap between what markets are doing and what we're seeing in the underlying economy," said Tom Hainlin, global investment strategist at Ascent Private Capital Management. "The question everyone has is how far has the market gone ahead of where the market needs to support those prices. That's why we haven't been overly aggressive."

April's rally is a mirror image to the market action in March. Last month, the S&P 500 plunged 12.5% while the Dow lost over 13%. The gains in April marked just the fifth time in history the S&P 500 experienced 10% monthly moves in opposite directions during back-to-back months.

"Investors are currently subjected to tragic nightly news stories and souring economic indicators, and yet markets have recently seen through the negativity and posted strong returns," said Scott Knapp, chief market strategist at CUNA Mutual Group. "Markets are now digesting actual data reflecting the reality of the pandemic and extrapolating it forward."

"Previously, all markets could evaluate is anecdotes from news headlines and forecasts produced by models. The actual data has been more hopeful versus expectations set by the headlines and models," he said. 

This month's sharp gains have been driven by hopes for an earlier reopening of the economy than expected and a potential coronavirus treatment.

Gilead Sciences said Wednesday a study from the National Institute of Allergy and Infectious Diseases met its primary end point. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said remdesivir shows a "clear-cut" positive effect when treating the virus. 

But even under an optimistic recovery scenario, "we would still expect genuine distress in pockets of the economy which either came into the crisis with a poor supply/demand imbalance or is likely to see the latter radically disrupted (a good portion of commercial real estate unfortunately ticks both boxes)," Michael Shaoul, chairman and CEO of Marketfield Asset Management, said in a note.

Big tech shares bucked the negative trend in the market Thursday after Facebook reported promising revenue figures despite the global coronavirus outbreak.

Facebook jumped more than 5% after it reported its advertising sales stabilized in the first three weeks of April following a "significant" pullback. The social media giant also posted  first-quarter per-share earnings of $1.71 and revenues of $17.74 billion.

Amazon and Netflix both gained at least 1.9% while Apple climbed 2.2%.

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