By Stan Chow, Alex Veiga and Damian J. Troise
AP Business Writers

NEW YORK (AP) — Stocks swung back down Wednesday after more signs piled up of the economic damage being caused by the coronavirus outbreak.

Markets have been stuck cycling between fear and budding optimism in recent weeks as investors try to guess how long and deep the looming recession will be, with the switch often flipping overnight or even within the same day. 

Economists have been slashing forecasts in advance of what’s expected to be the worst downturn since the Great Depression, but several reports arriving Wednesday were even more dismal than expected, including a record drop for U.S. retail sales. 

Stocks around the world were already down in early Wednesday trading, reversing Tuesday’s up trend, and the drops accelerated after the release of the reports. The S&P 500 was down 2.7% after the first hour of trading. The Dow Jones Industrial Average fell 647 points, or 2.7%, to 23,301, and the Nasdaq was down 1.7%. 

“We should take any company forecast and analyst forecast with a grain of salt here,” said David Kelly, chief global strategist at JPMorgan Funds “There are many analysts who are just as bewildered as companies are.”

“What you need to be here is an epidemiologist more than anything else,” he said.

Stocks will likely remain volatile as long as investors are uncertain about how long the downturn caused by the outbreak will last, and that ultimately depends on when health experts can corral the virus. 

Wednesday’s economic lowlight was a report that showed U.S. retail sales sank a record 8.7% last month, as the engine of the U.S. economy gets locked away amid widespread stay-at-home orders to slow the spread of the virus. A separate survey of business conditions for manufacturers in New York state plunged to its lowest level in history, by a wide margin. Industrial production across the country also failed to meet economists’ already low expectations, while a measure of confidence among home builders fell to its lowest level since 2012. 

Treasury yields sank after the release of the reports, a sign of concern among investors about future growth in the economy. The yield on the 10-year Treasury fell to 0.65% from 0.75% late Tuesday. 

The economic data is so dire that prices for stocks are swinging on the basic question about whether some companies will be able to continue to exist. 

“What you want to know is that the company can survive intact,” said Kelly. “You need to know that the company can weather the storm.”

Energy stocks took the sharpest losses after oil prices plunged to another 18-year low. Those in the S&P 500 index fell 7.2%, including a 15.6% plunge for Noble Energy and an 11.9% drop for Occidental Petroleum. 

Demand for oil around the world will fall this year by a record amount amid widespread lockdowns, the International Energy Agency said Wednesday. Benchmark U.S. crude touched its lowest price since 2002 before recovering slightly to $19.46, down 65 cents, or 3.2%, from a day earlier. Brent crude, the international standard, fell $2.02, or 6.8%, to $27.58 per barrel.

Financial stocks were also among the market’s biggest losers after more banks said they had to set aside billions of dollars in preparationfor a coming avalanche of borrowers defaulting on their loans. Bank of America fell 5.6% after reporting its results, while Citigroup lost 4.5%. 

In Europe, London’s FTSE 100 lost 3.2%, and the DAX in Frankfurt declined 3.7%. The CAC 40 in France retreated 3.6% to 4,437. The Nikkei 225 in Tokyo declined 0.5% , and Hong Kong’s Hang Seng was off 1.2%.

Investors are focusing on how and when authorities may begin to ease business shutdowns and limits on people’s movements imposed to slow the spread of the coronavirus. The S&P 500 had jumped 3.1% just a day earlier on hopes that the outbreak was leveling off in some hotspots and could lead to parts of the economy opening back up. 

It capped a rally that sent the S&P 500 up 27% since hitting a bottom on March 23, which got its start following massive aid promised by the Federal Reserve and U.S. government to prop up the economy.

U.S. President Donald Trump has been discussing how to roll back federal social distancing recommendations. U.S. governors are collaborating on plans to reopen their economies in what is likely to be a gradual process to prevent the coronavirus from rebounding.

China has reopened factories, shops and other businesses after declaring victory over the outbreak but forecasters say it will take months for industries to return to normal output, while exporters will face depressed global demand.

But if the market’s hopes for an upcoming reopening prove to be too optimistic, it likely sets them up for steep declines ahead. 

AP Business Writer Joe McDonald contributed.