Coronavirus concerns pummel major indexes as investors flee to bonds
NEW YORK (Reuters) – U.S. stock indexes tumbled on Friday as fears of economic damage intensified with the global tally of coronavirus cases crossing 100,000, sending investors scurrying to the safety of bonds.
The S&P 500 fell 3% in its tenth decline over the past 12 sessions as moves to contain the virus crippled supply chains and prompted a sharp cut to global economic growth forecasts for 2020. Yields on long-dated U.S. Treasuries fell to record lows as investors fled to bonds.
The benchmark index is set to close out the week more than 14% below its record close on Feb. 19.
The drop in Treasury yields weighed heavily on shares of financial companies, which tumbled 4.8%. The S&P 500 Banks index dropped 5.9%, bringing its total decline for the week to nearly 9%.
Shares of cruise operators Carnival Corp and Royal Caribbean Cruises Ltd also slide after Reuters reported that the administration of U.S. President Donald Trump was considering ways to discourage U.S. travelers from taking cruises. Carnival shares were last down 3.8%, and Royal Caribbean shares were last 4.2% lower.
“The decline today is all about the efforts to contain the spread of the virus,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management in Boston. “The measures being taken could dampen commerce and consumer activity, and markets are responding to that.”
The Cboe Volatility Index, known as ‘Wall Street’s fear gauge,’ hit its highest level since August 2015 and was last trading at 52.4.
Data showing a robust pace of hiring in February largely went ignored in Friday’s trading, given the data captured little of the impact from the coronavirus. A sharp downturn in later economic and corporate earnings data would likely strike a further blow to U.S. markets, analysts said.
“It’s proving very difficult right now for market participants to look through another year of poor global growth and flat-to-negative earnings,” said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.
The Dow Jones Industrial Average fell 737.09 points, or 2.82%, to 25,384.19, the S&P 500 lost 106.6 points, or 3.53%, to 2,917.34 and the Nasdaq Composite dropped 319.82 points, or 3.66%, to 8,418.78.
All 11 S&P sectors were trading lower, led by a 6.5% drop in energy stocks, which tracked a near 8% slump in oil prices. [O/R]
Starbucks Corp shares declined 3.1% after the coffee chain said it expected its China sales to fall by 50% in stores open for at least a year.
Costco Wholesale Corp shares fell 3.5% as it said it was struggling to keep up with demand for essentials, including disinfectants.
Declining issues outnumbered advancing ones on the NYSE by a 7.53-to-1 ratio; on Nasdaq, a 5.88-to-1 ratio favored decliners.
The S&P 500 posted three new 52-week highs and 142 new lows; the Nasdaq Composite recorded 12 new highs and 515 new lows.
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