U.S. stocks fell sharply Thursday as coronavirus-fueled swings around global markets continued over the potential economic fallout from the outbreak.
The Dow Jones industrial average dropped 950 points, while the Standard & Poor’s 500 fell 3.2%. The technology-heavy Nasdaq Composite slid 2.8%.
Treasury yields fell to more record lows as the market swung back to fear about the effects of a fast-spreading virus in its latest yo-yo move.
The growing understanding that the spread of infections — and the resulting damage to the economy — may not slow anytime soon is pulling sharply on markets. That pull has taken turns this week with the increasingly worldwide push that governments and central banks are trying to give markets through spending plans and interest-rate cuts.
Get used to such vicious swings, which will likely keep going as long as the number of new infections continues to accelerate, many analysts and professional investors say. Just within Thursday’s trading, the S&P 500 dropped as much as 2.9% in the morning before clawing back half the losses, only to fall lower again.
“We expect markets to remain volatile,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note. “The unfolding nature of the coronavirus threat—both real and perceived—is not yet quantifiable, and, as such, the current global policy response can’t immediately be judged as sufficient or insufficient for restoring investor confidence in the short term.”
Factories in China are gradually reopening, and a return to a sense of normal life may even be on the horizon following swift and severe actions by the government to corral the virus.
But elsewhere in the world, the mood is much darker. In the U.S., the death toll climbed to 11 due to the virus. California declared a statewide emergency late Wednesday, joining Washington, Florida and Hawaii. Southwest Airlines warned its investors that it’s seen a significant decline in demand in recent days and an increase in customers cancelling trips.
Bond investors continued to piled into safe-haven assets such as U.S. government bonds. The yield on the 10-year Treasury fell to 0.89% Thursday, below its all-time low of 0.906% earlier in the week.
The declines in the stock market come a day after the Dow Jones industrial average rallied nearly 1,200 points, an about-face after shedding nearly 800 points on Monday. Health care stocks jumped Tuesday after former Vice President Joe Biden solidified his contender status for the Democratic presidential nomination. Investors see him as more business-friendly than Senator Bernie Sanders.
Global benchmarks rose in almost every market overnight. France’s CAC 40 added 0.5%, while Germany’s DAX was up nearly 0.6%. Britain’s FTSE 100 inched up 0.2% to 6,830.92.
Contributing: The Associated Press.