U.S. stocks lost ground on Thursday as grim economic data and mixed earnings prompted investors to take profits at the close of the S&P 500's best month in 33 years, a remarkable run driven by expectations the economy will soon start recovering from crushing restrictions enacted to curb the coronavirus pandemic.

While risk-off selling pulled all three major U.S. stock averages into the red, the S&P 500 and the Dow posted their largest monthly percentage gains since January 1987, with the Nasdaq having its best month since June 2000.

The three indexes remain well within 20% of record highs reached in February, having quickly rebounded since shutdown efforts to curb the spread of the coronavirus pandemic brought the economy to a grinding halt.

The five-week tally of unemployment claims topped 30 million and consumer spending has plummeted, according to the latest round of dismal indicators providing another snapshot of the crushing economic effects of the widespread shutdown.

"We've had a tremendous run but we've had the worst economic data since the Great Depression," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "Business and earnings might not be snapping back as quickly as the v-shaped recovery on Wall Street would imply."

The Federal Reserved announced that it would broaden its "Main Street Lending Program" by lowering the minimum loan size and expanding eligibility.

"Wall Street is liking all the programs that the government and the Fed are putting together," Nolte added. "So Wall Street is doing fine but Main Street is going to be a longer process."

The Dow Jones Industrial Average fell 288.14 points, or 1.17%, to 24,345.72, the S&P 500 lost 27.08 points, or 0.92%, to 2,912.43 and the Nasdaq Composite dropped 25.16 points, or 0.28%, to 8,889.55.

Of the 11 major sectors in the S&P 500, all but consumer discretionary and communications services closed in negative territory, with energy companies suffering the largest percentage loss.

Earnings season continues apace, with 236 of the companies in the S&P 500 having reported quarterly results. Of those, two-thirds have surprised consensus estimates to the upside, according to Refinitiv data.

But there have been 90 negative pre-announcements in the first quarter, compared with 40 positive, and analysts see aggregate S&P 500 earnings dropping by a year-on-year rate of 14.4% in the first three months of 2020, per Refinitiv.

Amazon.com reported results after the closing bell. In post-market trading, its shares were down nearly 5%. Apple Inc earnings were expected soon.

Facebook Inc climbed 5.2% after the social media company reported better-than-expected quarterly revenue.

American Airlines posted its first quarterly loss since emerging from bankruptcy in 2013, sending its shares down 4.9%.

Declining issues outnumbered advancing ones on the NYSE by a 2.58-to-1 ratio; on Nasdaq, a 2.81-to-1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and one new low; the Nasdaq Composite recorded 25 new highs and four new lows.

Volume on U.S. exchanges was 12.80 billion shares, compared with the 12.3 billion average over the last 20 trading days. 

GLOBAL MARKETS

World equity benchmarks dipped to close their best month in 11 years as a rebound in oil prices, encouraging early results from a COVID-19 treatment trial and expectations of more government stimulus helped ease the pain of February and March.

Safe-haven assets including the dollar and government bonds were little changed, reflecting an unsettled market weighed down by concerns about containing the coronavirus outbreak and jobs data in the United States that was worse than expected.

"It's a hope-based rally rather than an evidence-based rally," said Anthony Doyle, cross-asset specialist at fund manager Fidelity International in Sydney.

There were still worries about a second wave of infections, Doyle said, adding that huge piles of cash waiting to go back into the markets suggest investors remained nervous.

MSCI's gauge of stocks across the globe shed 0.79% following broad losses in Europe and gains in Asia that pushed Japan's Nikkei to a seven-week high.

The index gained 10.5% in April, its best month since an 11.3% gain in April 2009 as the markets were recovering from the 2008 financial crisis.

"We have gone back to a turbocharged version of the great financial crisis," said Simon Fennell, a portfolio manager in William Blair's global equity team, referring to how markets have surged on mass central bank and government stimulus.

Declines in the equity market came on the heels of a strong finish on Wall Street on Wednesday after partial results from a trial of Gilead's antiviral drug remdesivir suggested it could help speed recovery from COVID-19, the respiratory disease caused by the new coronavirus.

Partial results from the 1,063-patient U.S. government trial of Gilead's remdesivir were hailed as "highly significant" by the top U.S. infectious disease official, Anthony Fauci.

But since treatment hopes do not seem to take into account regulatory and distribution difficulties, should a treatment be found, currency and bond markets were more circumspect.

"Any positive medical development is helpful," said Westpac FX analyst Sean Callow. "But no one should be counting on a major breakthrough. The key for markets is control of the spread of the virus."

Safe haven assets held steady after U.S. unemployment claims were greater than expected. Benchmark 10-year notes last fell 4/32 in price to yield 0.6377%, from 0.627% late on Wednesday.

Initial claims for state unemployment benefits totaled a seasonally adjusted 3.839 million for the week ended April 25, the U.S. government said. That was down from 4.442 million in the prior week.

Commodities were also set to close the month significantly higher. Gold is set for its best month in four years and copper, which is seen as a something of a bellwether of global industry, was on track for its best performance since December 2017.

Hope that demand could soon return helped push oil prices broadly higher. U.S. crude recently rose 24.97% to $18.82 per barrel and Brent was at $25.39, up 12.64% on the day.