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U.S. stocks dropped Friday, capping their worst week since the height of the financial crisis as investors remained jittery about the direction of the economy despite hopes for government and central bank action to combat the coronavirus pandemic.
The Dow Jones industrial average tumbled 913.21 points to close at 19,173.98, falling back below 20,000 after wild price swings over the past week. The Standard & Poor’s 500 fell 4.3% to end at 2,304.92. The Nasdaq Composite lost 3.8% to close at 6,879.52.
For the week, the Dow dropped more than 17%, its worst one-week percentage drop since October 2008.
Stocks erased early gains after Gov. Andrew Cuomo of New York, a hotspot for coronavirus cases, banned all non-essential travel, mandated non-essential personnel stay at home and required all businesses to shutter if they do not fit specific criteria.
Despite the latest bout of selling, hopes remain that there will be progress in finding virus treatments.
“The one glimmer of light in this dark period is that Asia and its supply chain is recovering quicker than expected,” says Daniel Ives, an analyst at Wedbush Securities. “Even though consumers and investors across the U.S. and Europe are in lockdown, we are seeing signs that the global supply chain is starting to normalize over the longer term.”
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Improvements in the flow of goods and materials will help drive growth across tech industries, including chip makers, software firms and companies developing cellular technology known as 5G, Ives added.
On Friday, workplace-software maker Slack, software company DocuSign and Zoom Video Communications all jumped at least 5%.
“Investors are finding safety in this unprecedented market in some of the larger tech companies who have strong balance sheets that will not only survive, but look compelling at these valuations once we get on the other side of this pandemic,” Ives says.
Investors were also encouraged after seeing more steps by the Federal Reserve and other central banks and governments to support credit markets and the economy. The Fed said Friday it would extend its asset purchase program into short-term municipal bonds to keep credit flowing.
“Global markets have taken fright at the scale of potential economic damage wrought by the coronavirus containment measures,” analysts at BlackRock Investment Institute said in a note. “We see the economy coming to a near standstill but expect activity to ultimately return with limited permanent economic damage as long as authorities deliver an overwhelming fiscal and monetary policy response to bridge businesses and households through the shock.”
Members of President Donald Trump’s economic team were convening Friday on Capitol Hill to launch negotiations with Senate Republicans and Democrats racing to draft a $1 trillion-plus economic rescue package.
Worldwide, the death toll has topped 10,000, with more than 255,300 confirmed cases, according to the Johns Hopkins University data dashboard. In the U.S., there were more than 200 deaths and over 14,000 confirmed cases.
Investors continued to seek safety in U.S. government bonds, driving their yields broadly lower. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, slid to 0.94% from 1.12% late Thursday.
Oil has been plunging recent weeks as investors anticipate a sharp drop in demand for energy as manufacturing, travel and commerce grind nearly to a halt. Crude is down by nearly half from $45 a barrel earlier this month. A price war between Saudi Arabia and Russia has also pushed oil lower.
In Europe, Germany’s DAX rose 3.7% while the CAC 40 in Paris added 5%. Britain’s FTSE 100 climbed 0.8%. Japan’s Nikkei 225 index gave up 1.04%. Hong Kong’s Hang Seng index rose 5.05%, and the Shanghai Composite index added 1.61%.
Contributing: The Associated Press
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