Global markets slumped Thursday, with the Dow sliding nearly 260 points as investors worried over emerging threats to the economic recovery, from a pandemic resurgence to labor market pressures.

On Thursday, Japan declared a state of emergency for Tokyo and said it would bar spectators from Olympic events held in and around the city as it tries to beat back a surge in coronavirus cases. Meanwhile, the more virulent delta variant has taken root in more than 100 countries, according to the World Health Organization, including those with high vaccination rates.

For investors, the developments served as yet another stark reminder that the pandemic is far from over. Asian markets closed mostly in the red, with Hong Kong’s Hang Seng Index shedding nearly 2.9 percent. European markets also fell sharply, with France’s CAC 40 index sliding 2 percent, the Pan-European Stoxx 600 dropping 1.8 percent and the German Dax losing 1.7 percent.

“Global markets have chosen today to price in the dawning realization that COVID isn’t nearly done damaging lives and economies,” Danni Hewson, a financial analyst with AJ Bell, said in commentary Thursday. “Case numbers are rising and it doesn’t matter how loudly politicians shout about ‘recovery’ and relaxation of restrictions there is a very real possibility that living with this disease will require a few more U-turns.”

The Dow Jones industrial average had tumbled as much as 536 points before cutting some losses. It ended the day down 259.86 points, or 0.8 percent, at 34,421.93.

The S&P 500 fell 37.31 points, or 0.9 percent, to end the session at 4,320.82. The tech-heavy Nasdaq composite index dropped 105.28 points, or 0.7 percent, to settle at 14,559.79. Both indexes had notched record highs the day before.

Companies whose fates are heavily tethered to the recovery also saw their shares waver: Carnival stock was down 1.5 percent after recovering some ground, and United Airlines fell 1.3 percent. Big banks, such as JPMorgan Chase, and chipmakers Nvidia and Qualcomm also flashed red.

Jitters extended to cryptocurrency markets, where bitcoin tumbled 4.6 percent to roughly $33,041. Bitcoin has taken a beating in recent weeks amid China’s crackdown on cryptocurrency mining and trading.

“The mood in the markets is starting to sour,” Sophie Griffiths, market analyst with Oanda, wrote in commentary Thursday. “Concerns over the health of the economic recovery are denting risk sentiment and hitting demand for stocks even as the Federal Reserve moves towards tapering asset purchases.”

An unexpected increase in weekly jobless claims stirred more concerns about the recovery. An estimated 373,000 Americans filed initial unemployment claims last week, the Labor Department reported Thursday, up about 2,000 from the previous week. Economists had projected a modest decline.

Though Thursday’s figures are significantly lower than they were this time last year, they are also a long way from the 256,000 recorded pre-pandemic.

In the United States, the labor market remains a chief concern: Job openings are at a record high according to the Labor Department, which reported more than 9.2 million open positions at the end of May as employers struggle to find workers amid a rush in summer business activity.

“Fresh job losses are not the major issue that they were earlier in the pandemic,” Mark Hamrick, senior economic analyst at Bankrate, said in commentary earlier this week. “Of more concern at present is the still heightened level of unemployment, the dampened level of labor force participation and continuing challenges for employers who want to add workers.”

The 10-year U.S. Treasury sank to its lowest level since February on Thursday as investors sought shelter from volatility, before ticking slightly higher to 1.29 percent. Bond yields move inversely to prices.

“The sharp drop in yields reflects the market’s concern that the Fed will begin tapering soon and that the removal of liquidity from the system will create volatility and a rush out of risk assets (like equities) and toward safe havens (like government bonds),” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, wrote in commentary Thursday.

Gold, another investor safe haven, rose nearly 0.8 percent to about $1,817 an ounce.

Fears that the pandemic will hamper global travel pushed oil markets lower, with Brent crude, the international oil benchmark, dipping 0.1 percent to $73.34 a barrel. West Texas intermediate crude, the U.S. benchmark, fell 0.3 percent to $71.97.

Hugh Johnson, chairman and head of investment strategy at Hugh Johnson Advisors, told Yahoo Finance that Thursday’s declines were a minor setback: “I still think it’s a bull market. It has further to go.”