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Stocks Continue to Tumble on Coronavirus Concerns Coronavirus Drives Stocks Down for 6th Day
(about 1 hour later)
Global markets tumbled on Thursday as jittery investors again abandoned risky investments because of worries about the spreading coronavirus outbreaks. On Wall Street, the S&P 500 index continued to fall in its sixth straight day of losses after a major selloff earlier in the week. A global stock market meltdown entered its sixth day on Thursday, a decline that has reflected rising fear over the fast spreading coronavirus and pulled major benchmarks to near four-month lows.
The selling could push major benchmarks in the United States into a correction, a term used to indicate that an index is down more than 10 percent from its most recent high. Before trading began Thursday, the S&P 500 was down almost 8 percent from a record reached last week. The Dow Jones industrial average was down about 9.6 percent from its peak earlier in February. Thursday’s selling came after public health officials in the United States and Germany said new patients in each country had no known connection to others with the illness, a development that could complicate efforts to track the virus. Cases of the virus have appeared in at least 47 countries.
The collapse in investor confidence spread far beyond stocks. Crude oil fell more than 4 percent, as investors weighed the chance of growing economic paralysis related to measures to stop the outbreak. The speed of the market turndown — the S&P 500 was at record highs just a week ago — has been stunning. Trading was volatile, and the index was down about 1.5 percent by midday on Thursday. It is close to 10 percent below a high reached on Feb. 19, a drop known as a correction in financial markets.The last time stocks fell that much was late 2018, when investors worried that the trade war and rising interest rates might tip the U.S. economy into a recession. This recent decline has put the blue-chip benchmark on pace for its worst weekly performance since the 2008 financial crisis.
Updated Feb. 26, 2020 Shares in Europe and Asia were similarly hard hit on Thursday, and the collapse in investor confidence spread far beyond stocks. Crude oil fell more than 4 percent, as investors weighed the chance of growing economic paralysis related to travel restrictions, factory shutdowns and other measures to stop the outbreak.
Bond markets broadcast deep pessimism about the economy, as money flooded into Treasury markets, pushing prices sharply higher, and yields — which move in the opposite direction — to once unthinkable depths.Bond markets broadcast deep pessimism about the economy, as money flooded into Treasury markets, pushing prices sharply higher, and yields — which move in the opposite direction — to once unthinkable depths.
Updated Feb. 26, 2020
The yield on the 10-year Treasury note touched 1.25 percent in morning trading. Prices for junk bonds, and even safer corporate debt, fell.The yield on the 10-year Treasury note touched 1.25 percent in morning trading. Prices for junk bonds, and even safer corporate debt, fell.
“Stocks and bonds say we’re doomed,” wrote Chris Rupkey, chief financial economist at MUFG Union Bank, in a research note on Thursday. “Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down.”“Stocks and bonds say we’re doomed,” wrote Chris Rupkey, chief financial economist at MUFG Union Bank, in a research note on Thursday. “Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down.”
The latest wave of selling has come after public health officials in the United States and Germany said new patients in each country had no known connection to others with the illness. Cases of the virus have appeared in at least 47 countries. On Thursday, analysts at Goldman Sachs predicted that companies in the S&P 500 would generate no profit growth as a result of the crisis, because of a “severe decline in Chinese economic activity,” disruption in the supply chain for American companies and a slowdown in the United States economy.
Investors have been trying to assess the virus’s financial impact, fearing that its rapid spread outside China could threaten economic growth and corporate profits as companies restrict travel and factories in China remain shuttered. On Thursday, analysts at Goldman Sachs predicted that companies in the S&P 500 would generate no profit growth as a result of the crisis, because of a “severe decline in Chinese economic activity,” disruption in the supply chain for American companies and a slowdown in the United States economy. Microsoft were down nearly 3 percent after the company said on Wednesday that its sales in the current quarter would be lower because of a disruption to its supply chain. Anheuser-Busch InBev on Thursday forecast a steep drop in quarterly profit. Its shares fell 8 percent.
Here’s the latest:
The S&P 500 fell 2 percent in early trading, and the Dow Jones industrial average dropped 1.9 percent.
In Europe, the FTSE 100 in Britain, the CAC 40 in France and the DAX in Germany were all trading more than 3 percent lower.
In Asia, stocks in Japan fell more than 2 percent. Shares in China bucked the general trend, with Shanghai rising 0.1 percent.
Oil prices also fell, with the price of the international benchmark, Brent crude, dropping more than 2 percent. The price of gold rose, signaling continued nervousness among global investors.
Investors looking for safer places to put money have piled into government bonds, pushing the yield on the 10-year Treasury note to record lows.
Microsoft on Wednesday said that its sales in the current quarter would be lower because of a disruption to its supply chain. Its shares fell more than 2 percent in early trading on Thursday. Anheuser-Busch InBev joined the chorus on Thursday, as the brewer forecast a steep drop in quarterly profit. Its shares fell 8 percent.
Companies have also scaled back travel. The French cosmetics giant L’Oreal suspended all business travel for its 80,000 employees until the end of March. Nestlé, the giant Swiss-based food company, said it would suspend all international business trips for its 290,000 workers until mid-March.Companies have also scaled back travel. The French cosmetics giant L’Oreal suspended all business travel for its 80,000 employees until the end of March. Nestlé, the giant Swiss-based food company, said it would suspend all international business trips for its 290,000 workers until mid-March.
Read our live coverage of developments around the coronavirus here. In Europe, the FTSE 100 in Britain, the CAC 40 in France and the DAX in Germany were all more than 3 percent lower on Thursday. Asian markets closed the day largely down, though shares in China bucked the general trend, with Shanghai rising 0.1 percent.
Kevin Granville and Katie Robertson contributed reporting.Kevin Granville and Katie Robertson contributed reporting.