By Will Horner

U.S. stocks fell in early trading Wednesday, as rising coronavirus infections shook investors' confidence in the global economic recovery and sent them toward the safety of Treasurys and the dollar.

The S&P 500 dropped 2.3%, suggesting the broad index will retreat for its third consecutive session. The benchmark has slipped more than 5% from its record closing level in early September.

The Dow industrials lost 615 points, or 2.2%, while the Nasdaq Composite retreated 2.6%.

The selling was broad based and appeared to favor the safest assets, especially short-term government bonds and the U.S. dollar. Along with stocks, oil and emerging market currencies tumbled. Even gold, considered a haven in stormy markets, was nearly 2% lower.

Stocks have slid lower this week on a raft of uncertainties.

Worsening coronavirus case numbers may make more stringent restrictions imperative across the U.S. and Europe, potentially dealing a setback to a fragile economic recovery. New U.S. cases climbed back above 70,000 as states across the country continued to report high levels of fresh infections.

"A month ago, the narrative in the market was very much that lockdowns would be limited and targeted, and so would have a smaller impact on the economy," said Hugh Gimber, global market strategist at J.P. Morgan Asset Management. "But now, what we are seeing is broader concerns that lockdowns might be wider and have a much wider impact."

The U.S. reported more than 73,200 new cases Tuesday, the second daily increase in a row, according to data compiled by Johns Hopkins University.

Investors also remain leery about the U.S. election, and whether delays in counting mail-in ballots may lead to uncertainty in the days after the Nov. 3 election.

Hopes have also faded that talks between the White House and Democrats would produce agreement over a fresh package of stimulus measures before the election, propping up the economic recovery.

"When you hit these record case numbers it grabs people's attention," said Jeff Mills, chief investment officer at Bryn Mawr Trust. "And when you have that combined with a breakdown in stimulus talks it combines into this negative catalyst."

Another batch of corporate earnings reports were also being scrutinized, and Ford and Visa are set to report just after the market closes.

General Electric shares were up 9.2% after it surprised analysts with a third-quarter profit. Automatic Data Processing shares jumped over 8% after quarterly profits rose year-on-year.

Microsoft's stock was down 3.7% despite the company saying that sales had jumped thanks to surging demand for its videogames and cloud-computing services amid the pandemic.

Investors' expectations are too high, Mr. Mills said, and may lead to stocks taking a beating.

"When companies miss or even just meet expectations, you are seeing negative reactions in the stocks: that tells me valuations are quite optimistic," said Mr. Mills. "Earnings expectations are quite high, and if companies underperform, I am not sure the market will react to that well."

Investors were also looking to pharmaceutical companies for updates on coronavirus vaccine trials.

Pfizer said Tuesday that late-stage trials for its vaccine were in the "last mile" but called for patience as the drugmaker has yet to complete a review of whether the vaccine was safe. Novavax said it hopes to launch phase three trials of its own vaccine in Mexico and the U.S. by the end of next month.

Commodity markets were also under pressure with Brent crude, the international benchmark for oil, falling 3.8% to $40.02 a barrel.

As risk appetite waned, investors sought the safety of U.S. government bonds. The yield on the 10-year Treasury slipped to 0.750%, from 0.778% on Tuesday.

The ICE U.S. Dollar Index, which measures the greenback against a basket of currencies, gained 0.8% as investors worried about fresh lockdowns. The dollar typically rises when investors pull out of stocks due to its status as a haven currency.

European markets have been particularly hard hit as the Continent grapples with a surge of new cases and governments in France and Germany consider stricter lockdowns. The pan-continental Stoxx Europe 600 fell 2.8% to its lowest level since May. In France, the CAC 40 index was down 3.6% and Germany's Dax index was down 4.1%.

Investors were also shedding riskier European bonds, resurrecting worries that Europe will have trouble pushing through another round of relief measures if the new lockdowns make increased spending necessary. The yield on Italy's benchmark 10-year bond rose to 0.759%, while Spanish and Greek bond yields also climbed. German 10-year yields, considered Europe's safest, fell to their lowest since March at minus 0.642%.

In Asia, major stock benchmarks ended the day on a mixed note. Japan's Nikkei 225 dropped 0.3% while China's Shanghai Composite Index closed up 0.5%.

Write to Will Horner at William.Horner@wsj.com

(END) Dow Jones Newswires

10-28-20 1031ET