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U.S. stocks gyrated Friday as fears escalated over the fast-spreading coronavirus, with Wall Street capping its worst week since the depths of the global financial crisis.
Stocks have erased $3.6 trillion in market value since eclipsing records last week, driven by mounting worries the deadly outbreak will further damage an already slowing global economy.
The fallout over the virus has shaved off more than 3,500 points from the Dow Jones Industrial Average this week alone, its largest ever. For the week, the Dow and S&P 500 shed 12% and 11.5%, respectively, their worst performance in that span since October 2008, according to FactSet.
“This week reminded many investors of 2008, which isn’t a happy memory,” Ryan Detrick, senior market strategist at LPL Financial, says in a note. “None the less, remember that the overall economic backdrop is still healthy in the U.S., but when fear grips, that doesn’t matter.”
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The Dow plummeted nearly 1,200 points on Thursday – its biggest one-day point drop ever – on rising anxiety over the outbreak. Thursday’s losses put the blue-chip average into a correction – a decline of 10% from a recent high – for the first time since December 2018. The index is off 14% from its Feb. 12 record while the S&P 500 is down nearly 13% from its Feb. 19 all-time high.
To be sure, investors are still ahead if they scooped up shares when the stock market bottomed in its last correction on Christmas Eve 2018.
If an investor had put $10,000 in an S&P 500 index fund on Dec. 24, 2018, it would have been worth $14,402 with dividends when the stock market hit a record on Feb. 19 and worth $11,882 through Thursday’s close.
On Friday, the Dow slumped 357.28 points to close at 25,409.36, recouping some losses after briefly dropping more than 1,000 points. The Standard & Poor’s 500 slid 0.8% to end at 2,954.22. The Nasdaq Composite closed virtually unchanged to finish at 8,567.37.
Stocks whipsawed in wild trading Friday, with the Dow swinging more than 800 points from its session high to its low.
The VIX, known as Wall Street’s “fear gauge,” surged more than 130% for the week, its biggest jump over that span in the past two decades, according to FactSet.
Financial and health care stocks were among the biggest losers in Friday’s broad market slide. Energy, the worst performing sector this year, held on to a gain.
Stocks briefly pared some of their losses in afternoon trading after Federal Reserve Chairman Jerome Powell said central bank officials were ready to take action if the virus was a threat to the U.S. economy.
“The Federal Reserve is closely monitoring developments and their implications for the economic outlook,” Powell said in a statement. “We will use our tools and act as appropriate to support the economy.”
Fed-fund futures now project a 100% probability the central bank will cut interest rates by a quarter percentage point or more at its March meeting, according to CME Group’s FedWatch Tool.
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The virus outbreak has been shutting down industrial centers, emptying shops and severely crimping travel all over the world. More companies are warning investors that their finances will take a hit because of disruptions to supply chains and sales. Governments are taking increasingly drastic measures as they scramble to contain the virus.
“Investors have become extremely fearful of future economic growth,” Chris Zaccarelli, chief investment officer at investment adviser Independent Advisor Alliance, said in a note.
Market watchers have said for months that stocks were heavily overpriced and long overdue for another pullback. Zaccarelli compared this week’s sharp stock declines to the market turbulence in the final months of 2018, when investors were rattled by global trade relations and concerns about a creeping economic slowdown.
“Whether or not this is a good analogy will depend on how big a shock to the U.S. economy the coronavirus turns out to be,” Zaccarelli said.
The weeklong market sell-off follows months of uncertainty about the spread of the virus, which hit China in December and shut down large swaths of that nation by January. China is still the hardest hit country and has most of the 83,000 cases worldwide and related deaths.
Outbreaks in Italy, South Korea, Japan and Iran have fueled fears the coronavirus is turning into a global threat that might derail trade and industry. Anxiety intensified Thursday when the United States reported its first virus case in someone who hadn’t traveled abroad or been in contact with anyone who had.
“Given that China is such a big component of many global supply chains, we will almost certainly see weaker economic data globally over the next several months,” Detrick of LPL Financial says.
Investors continued to flock to safe haven corners of the bond market Friday, pushing yields to record lows again. The yield on the 10-year Treasury note fell sharply to 1.127% from 1.30% late Thursday. That yield is a benchmark for home mortgages and many other kinds of loans.
London’s FTSE 100 sank 3.2% and Frankfurt’s DAX tumbled 3.9%. France’s CAC 40 lost 3.4%. In Asian trading, the Nikkei 225 in Tokyo tumbled 3.7% and the Shanghai Composite Index also fell 3.7%. Hong Kong’s Hang Seng lost 2.4%.
The Associated Press contributed to this article.