Wall Street wrapped up its worst week since October 2008, with the Dow and S&P 500 sliding more than 4% on Friday as tough restrictions by New York and California to try to contain the spread of the coronavirus fueled worries about damage to the economy.
New York Governor Andrew Cuomo early on Friday ordered all non-essential workers to stay home, following on the heels of California's unprecedented statewide "stay at home" order issued late Thursday.
The moves by two of the most populous U.S. states affects some 40 million people. Also, federal authorities this week moved to close the borders with Canada and Mexico, with more than 12,000 cases having been confirmed in the United States as of Friday.
"The equity markets are still trying to get a handle on how bad the economy is going to be, and I think news of entire states being closed probably qualifies as incrementally negative," said Willie Delwiche, investment strategist at Robert W. Baird in Milwaukee.
It affects "a lot of economic activity and a lot of businesses."
In early trade, the market briefly attempted to build on Thursday's gains, as global policymakers turned on the taps to prop up financial markets reeling from weeks of heavy selling that ended Wall Street's record 11-year bull run. The benchmark S&P 500 index is down more than 31.9% since its record closing high on Feb. 19.
Investors are now counting on further stimulus over the next few days, as the U.S. Senate mulls a $1 trillion package that would include direct financial help for Americans.
"The bottom line here is the market is clearly actively anticipating the fiscal stimulus plan. It's almost like we're going to continue to be in these volatile swings until we get a little more clarity on how large that plan is," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
The Dow Jones Industrial Average fell 913.21 points, or 4.55%, to 19,173.98, the S&P 500 lost 104.47 points, or 4.34%, to 2,304.92 and the Nasdaq Composite dropped 271.06 points, or 3.79%, to 6,879.52.
All three major indexes registered their biggest weekly declines since October 2008, although the Cboe Volatility index - Wall Street's fear gauge - ended the day down at 66.04, in what some investors saw as a sign that selling may subside
A Reuters poll of economists suggested the global economy was already in recession, while analysts at U.S. stock market index operator S&P Global said volatility across geographies and asset classes was at record highs.
"Quadruple witching" added to choppy trading on Friday, with investors unwinding positions in futures and options contracts before their expiration.
AT&T Inc tumbled 8.7% as the wireless carrier said the outbreak might have a material impact on financial results and canceled a $4 billion share repurchase agreement.
The airlines sector rose 2.4% after losing more than half its value since late February.
Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.55-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 94 new lows; the Nasdaq Composite recorded 5 new highs and 257 new lows.
Volume on U.S. exchanges was 18.56 billion shares, compared to the 15.5 billion average for the full session over the last 20 trading days.
GLOBAL MARKETS
Gold rose more than 3% at one point as it regained a bit of its flight-to-safety luster and the yield on U.S. Treasuries fell as emergency measures aimed at stabilizing financial markets briefly took hold after days of sharp volatility.
The dollar staged a furious rally this week as investors scrambled to obtain cash, rising 4.32% in the biggest weekly gain since the 2008 financial crisis. The policy efforts helped staunch the steep nosedive in global equity markets.
A top International Monetary Fund official said the impact of the coronavirus pandemic would be "quite severe" but the long expansionary period preceding it should help the global economy weather the shock.
The Federal Reserve rolled out more emergency support as it enhanced efforts with other major central banks to ease a global dollar-funding crunch. It also backstopped a market essential for U.S. state and local government finances and ramped up its purchases of mortgage-backed securities.
Markets have been reassured by the speedy central bank action this week but the full fiscal response from governments remains to be seen and is critical, said Kristina Hooper, chief global market strategist at Invesco in New York.
"The dash to cash we saw earlier this week has been relaxed a bit. Now Treasuries are once again perceived to be a safe-haven asset class," Hooper said. "That's good, as it suggests at least a dialing down of risk-off sentiment."
Norway's central bank became the latest to cut interest rates, while China was set to unleash trillions of yuan of fiscal stimulus to revive its economy.
The dollar eased after currencies, from the Australian dollar to the British pound, tumbled to multi-year lows earlier this week.
MSCI's U.S.-centric gauge of stocks across the globe shed 1.84%, while emerging market stocks rose 4.58%.
U.S. gold futures settled 0.4% higher at $1,484.6 an ounce.
The dollar rose against a basket of currencies in a week when investors liquidated everything from stocks to bonds to gold and commodities to raise cash. The dollar hit a three-year peak of 102.99 in early Asian trading.
The dollar index fell 0.214%, with the euro down 0.24% to $1.0664.
The Japanese yen weakened 0.44% versus the greenback at 111.23 per dollar.
The global economy already is in recession as the hit to economic activity from the pandemic has become more widespread, according to economists polled by Reuters.
Oxford Economics cut its global growth forecast for 2020 to zero, making this year the second-weakest for the world economy in almost 50 years of comparable data, with only 2009, in the depths of the global financial crisis, being worse.
The broad pan-European STOXX 600 index rose 1.82%. But stocks pared some of their gains as fears over the economic shock from the coronavirus quashed initial optimism.
Britain's FTSE rose 0.8%, Germany's DAX gained 3.7%, and France's CAC 40 rose 5%.
The European Central Bank's 750 million-euro emergency bond purchase scheme, announced on Wednesday, has boosted southern European debt, alleviating some concern over how already heavily indebted states would finance the fiscal measures needed to defend against coronavirus.
Brazilian stocks fell on Friday, rounding off the steepest weekly fall since the Great Financial Crisis and the third largest in 30 years, as gloom deepened surrounding the coronavirus-hit domestic and international economic landscape.
Brazil's benchmark Bovespa index closed 2.3% lower at 66,750 points, wiping out earlier gains and bringing the week's decline to 19%. That was the biggest weekly loss since October 2008 and the third largest in three decades. Brazil's real strengthened slightly, briefly trading through 5.00 per dollar. But it still ended the week down more than 3%, and has now appreciated in only one week out of the last 12.
Investors in Asia were happy that Wall Street had not plunged again. South Korean shares bounced 7.4%, though that still left them down more than 11% for the week.
Australia's beleaguered market eked out a 0.70% gain, and futures for Japan's Nikkei were trading up at 17,710, compared with the cash close of 16,552.
Oil prices fell for the fourth week in a row, with U.S. crude posting its worst week since 1991, as the coronavirus outbreak knocked the demand outlook and Moscow rejected U.S. intervention in its price war with Saudi Arabia.
West Texas Intermediate fell $2.69 to settle at $22.53 a barrel while Brent crude futures fell $1.49 to settle at $26.98 a barrel.
Euro zone bond yields tumbled as risk sentiment picked up to support Southern European bonds.
Relatively calm trading in U.S. Treasuries early in the session returned to the volatile patterns seen earlier this week after Cuomo said he would issue his executive order.
Benchmark 10-year U.S. Treasury notes fell 124 basis points to yield 0.8869%.
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