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* Dow drops 1,000 points third time this week
* Defensive lead losses among sectors
* Mylan slumps after warning of financial hit from outbreak
* Nasdaq briefly turns positive in volatile session
* Indexes down: Dow 2.48%, S&P 1.92%, Nasdaq 1.13% (Adds comment, details; updates prices)
By Medha Singh
Feb 28 (Reuters) - Wall Street plunged in a volatile trading session heading into the weekend, extending a steep selloff from last week as the fast-spreading coronavirus raised fears of a global recession.
The three main stock indexes pared losses and the Nasdaq briefly turned positive on gains in technology stocks including Microsoft Corp and chipmakers Nvidia and Qualcomm.
However, the Dow Jones Industrials slumped more than 1,000 points during the session and if the index closes below this level, it would be its fifth 1,000-point decline in history and the third this week.
As the world prepares for a likely pandemic, investors rushed to safe assets, deepening an inversion of the U.S. Treasury yield curve, a classic recession signal.
"The uncertainty hovering over the markets will only be alleviated when there is a sense that the worst is almost over," said Quincy Krosby, chief market strategist at Prudential Financial Inc. "Until then it is 'risk off'."
The three indexes closed more than 10% below their recent record closing highs on Thursday and are on track for their worst week since the 2008 global financial crisis.
At 11:53 a.m. ET, the Dow Jones Industrial Average was down 638.24 points, or 2.48%, at 25,128.40, the S&P 500 was down 57.23 points, or 1.92%, at 2,921.53. The Nasdaq Composite was down 96.59 points, or 1.13%, at 8,469.89.
All the 11 S&P sectors were in the red with the utilities , consumer staples and real estate and financial sectors falling more than 3%.
While the magnitude of the economic damage from the containment measures, which have crippled supply chains and hit business investment, remained unclear, analysts have sharply downgraded their outlook for growth and corporate earnings.
Traders are now pricing in an interest rate cut by the Federal Reserve as soon as next month, but many have expressed doubts about how this would mitigate the impact of the outbreak.
Among individual stocks, Mylan NV dropped 8.3% after the drugmaker cautioned a financial hit from the coronavirus outbreak and warned of drug shortages in case of continued spread of the virus.
Declining issues outnumbered advancers for a 5.50-to-1 ratio on the NYSE and for a 2.99-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 127 new lows, while the Nasdaq recorded 14 new highs and 466 new lows. (Reporting by Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur)