Stocks tumbled once again on Friday, capping off their worst week since the financial crisis, as worries over the coronavirus and its impact on the economy continue to rattle investor sentiment.
The Dow Jones Industrial Average dropped 357.28 points, or more than 1%, to 25,409.36. The 30-stock Dow briefly fell more than 1,000 points then rallied into the close in a wild trading session characteristic of the week. The S&P 500 slid 0.8% to 2,954.22. The Nasdaq Composite closed flat at 8,567.37 but fell as much as 3.5% on the day.
For the week, the Dow fell more than 12% — its biggest weekly percentage loss since 2008. On a points basis, the Dow fell more than 3,500 points, far and away its largest weekly point loss ever. It also ended the week in correction territory, down 14.1% from an intraday record high set Feb. 12. The S&P 500 lost 11.5% week to date in its worst weekly performance since the crisis. The U.S. stock benchmark is off about 13% from its high notched just last week. The Nasdaq lost 10.5% this week and was nearly 13% below a record high.
“The reason it happened so quickly is because the momentum going up was so great,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “The hedge funds, the algorithmic trading, the quants: They play on momentum.”
A pledge by the Federal Reserve late Friday eased the market’s pain slightly into the close. Fed Chairman Jerome Powell said in a statement the central bank will “act as appropriate” to support the economy amid the coronavirus outbreak.
“What we have right now is a very scary global health scare, that has caused complex supply chains to stall,” said Art Hogan, chief market strategist at National Securities. “As such we have a supply shock currently. Easier monetary policy could help if we were to evolve into a demand shock with the economic damage that follows the path of COVID-19. Rate cuts are not only the wrong prescription for what ails the economy right now, they are bad medicine longer term since they could raise prices without a supply response.”
The major averages were under pressure on Friday in part because investors kept adding to their bond-market exposure and fleeing equities. The benchmark U.S. 10-year Treasury yield touched a fresh record low. It was last at 1.14%. Yields move inversely to prices.
Source: CNBC
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