Stocks open sharply lower on virus fears

  • Stocks open sharply lower on virus fears

Stocks open sharply lower on virus fears

Losses have been broad, with all 11 of the S&P 500's sectors falling into negative territory for the year this week.

The Dow Jones Industrial Average fell 588.05 points, or 2.5 per cent, to 25,038, and the S&P 500 lost 2.1 per cent.

Market participants are closely watching whether stocks will again end the day sharply lower.

Stocks sank again after another wild day, extending a rout that left the market with its worst week since October 2008.

Major indexes clawed back much of their intraday losses in the last 15 minutes.

The stock dive marks a startling shift from earlier in February, when confidence in highflying technology companies helped push major US indexes to new heights. Shares in Royal Caribbean Cruises lost 24% for the week and American Airlines Group stock fell toward its worst week on record.

"What I do know is that the coronavirus is not going to lead us into a financial crisis that is long lasting". "This is a market that's being driven completely by fear", said Elaine Stokes, portfolio manager at Loomis Sayles, with market movements following the classic characteristics of a fear trade: Stocks are down. To put that in perspective, the Dow's 508-point loss on October 19, 1987, was equal to 22.6%.

Treasury yields slipped further on Friday as investors piled into the safe haven government bonds. When yields fall, it's a sign that investors are feeling less confident about the strength of the economy. Japan is preparing to close schools nationwide. Saudi Arabia banned foreign pilgrims from entering the kingdom to visit Islam's holiest sites. At their heart, stock prices rise and fall with the profits that companies make.

Market swings may have snowballed because of derivatives activity and funds on Wall Street that make knee-jerk buying and selling decisions as tumult grows, spurring billions of dollars in selling this week. Big names like Apple and Budweiser brewer AB InBev are part of a growing list of companies expecting financial pain from the virus. Strategist David Kostin also cut his growth forecast for earnings next year.

Stocks opened sharply lower and extended their losses in the first hour of trading. Before the virus worries exploded, investors had been pushing stocks higher on expectations that strong profit growth was set to resume for companies after declining for most of 2019. The S&P 500 recently traded at its most expensive level, relative to its expected earnings per share, since the dot-com bubble was deflating in 2002, according to FactSet.

Over the week, virus fears have wiped almost $3 trillion off the combined market value of S&P 500 companies, putting the three main indexes on track their worst week since the 2008 global financial crisis. Inc., Occidental Petroleum Corp. and Dell Technologies Inc. on Thursday; and London Stock Exchange Group Plc on Friday.The Democratic presidential debate in SC is on Tuesday.The Bank of Korea announces its policy decision on Thursday, with rising risks of an interest-rate cut.US jobless claims, GDP and durable goods data are out Thursday.Japan industrial production, jobs, and retail sales figures are due on Friday. They are pricing in a 96% probability of a cut at the Fed's next meeting in March. According to data from the Chicago Mercantile Exchange's Fedwatch tool, the expectations for a half-point cut jumped from 47% just before the Fed's statement was released to 60% by the close of trading.

US stocks tumbled to an nearly 12-week low and bond yields plunged to records on rising concern the coronavirus will upend global supply chains critical to economic growth. China is still the hardest hit country and has most of the 83,000 cases worldwide and related deaths. Vacations could be canceled, restaurant meals skipped, and fewer shopping trips taken.

Some experts say the market was already primed for a decline, even before the threat of the virus escalated. Such volatility can worry people about their own companies and job security. Both of those trends can combine to discourage consumer spending and slow growth.