Stocks swing amid virus chaos
A dizzying, brutal week of trading dropped one last round of harrowing swings on investors Friday.
After skidding sharply through the day as fear pounded markets, Wall St faced steep drops for stocks and bond yields, which suddenly eased up in the last hour of trading. By the end of the day, the S&P 500 had more than halved its loss for the day to 1.7 per cent and even locked in a gain for the week.
It was the latest lurch in a wild ride that has sent stocks flipping between huge gains and losses - mostly losses the last two weeks, felt across the globe including in Australia.
Investors are trying to guess how much economic damage the coronavirus will ultimately inflict, and they're shifting by the minute as the number of new infections piles up on one hand and central banks and governments offer stimulus on the other. All the uncertainty has left markets churning.
"It's anyone's guess at this point why it rallied into the close," Adam Taback, chief investment officer for Wells Fargo Private Bank, said of the last hour of Friday's trading in the US.
Earlier in the day, the S&P 500 had been down 4 per cent. Even more alarming was another breathtaking drop in Treasury yields to record lows.
The 10-year Treasury yield falls when investors are worried about a weaker economy and inflation, and it sank below 0.70 per cent at one point. Earlier this week, it had never in history been below 1 per cent. It was at 1.90 per cent at the start of the year, before the virus fears took hold.
Even a better-than-expected report on US jobs wasn't enough to pull markets from the undertow. It's usually the most anticipated piece of economic data each month, but investors looked past February's solid hiring numbers because they came from before the new coronavirus was spreading quickly across the country.
"The bond market says the monster under the bed is much bigger and scarier than anyone expects right now," said Ryan Detrick, senior market strategist at LPL Financial.
At the heart of the drops is the fear of the unknown.
The virus usually causes only mild to moderate symptoms. But because it's new, experts aren't sure how far it will spread and how much damage it will ultimately do, both to health and to the economy.
Crude oil lost 7.2 per cent on worries that producers won't cut supplies enough to match the falling demand from an economy weakened by the virus.
A measure of fear in the US stock market surged 20 per cent.
Many analysts and professional investors say they expect the market's sharp swings to continue as long as the number of new cases accelerates.
The S&P 500 was down 3.6 per cent, at 3pm ET (7am AEDT).
It has been a particularly turbulent week, and every day has seen a swing of more than 2 per cent.
The Dow Jones Industrial Average fell almost 3 per cent, to 25,344.55.
It had been down as many as 894 earlier.
The Nasdaq fell 3.78 per cent.
The S&P 500 had set a record high just two weeks ago, on February 19.
On Monday, it was up 4.6 per cent, then down 2.8 per cent, up 4.2 per cent and down 3.4 per cent.
"At this point no one can really explain why the markets behave the way they do, and what may be next. The only thing we can say is this high volatility is bad," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
If Friday's moves hold, this will be the first time the S&P 500 has swung more than 2 per cent in either direction over five straight days since December 2008.
That was during the depths of the financial crisis, when investors worried that the world's financial system may melt down.
Stocks had climbed earlier in the week after US congressional leaders struck a deal on an $US8.3 billion ($A13 billion) bill to combat the coronavirus, which President Donald Trump signed overnight. But investors say a slowdown in the economy seems inevitable, and they need to see a slowdown in new infections before turning more optimistic.
"It comes down to we just have to have some good news on the coronavirus," Detrick said.