Stocks tumbled once again on Friday, adding losses to the market’s 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 710 points, or more than 2.5%, and briefly traded below 25,000. The 30-stock Dow was down more than 1,000 points earlier in the day. The S&P 500 slid 2.1% while the Nasdaq Composite briefly turned positive before trading back down by 1.2%.
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 1.16%. Yields move inversely to prices.
New Zealand and Nigeria reported overnight their first coronavirus cases. South Korea, meanwhile, confirmed more than 500 new cases. China reported 327 additional cases.
Caterpillar — a bellwether stock for global growth — slid 3%. Apple shares dropped 5.7% while Boeing and Coca-Cola also fell more than 5%.
The Cboe Volatility Index, also known as Wall Street’s so-called fear gauge, hit a high of 47.15, its highest level since February 2018. It last trade around 41.
The Dow plummeted nearly 1,200 points on Thursday — its biggest one-day point drop ever — as worries over the coronavirus possibly spreading sent stocks spiraling lower. The 30-stock average closed in correction territory along with the S&P 500 and Nasdaq Composite.
“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.”
The Dow had closed at a record high on Feb. 12. It only took the S&P 500 six days to fall from an all-time high into correction levels, marking the broad index’s fastest drop of that magnitude outside of a one-day crash.
“People have been so preconditioned to buy the dip and to always expect the market to recover that people can get smacked around with moves like this,” said Patrick Hennessy, head trader at IPS Strategic Capital. “No one knows how this thing ends.”
Thursday’s declines also put the Dow and S&P 500 down more than 10.5% each for the week, on pace for their worst weekly performance since 2008. Norwegian Cruise Line and American Airlines are among the worst-performing S&P 500 stocks this week, dropping more than 20% in that time. Las Vegas Sands has lost more than 10% week to date. Regeneron Pharmaceuticals is the only S&P 500 component that is higher for the week.
“The timing of this was just the worst with respect to investor sentiment being elevated,” said Doug Ramsey, chief investment officer at The Leuthold Group, referring to the coronavirus outbreak. “I’m not sure that the market has really priced in the potential economic impact of this.”
Concerns over the coronavirus have also led several companies to issue earnings and revenue warnings. Microsoft said Wednesday one of its key divisions may not meet the company’s previous revenue guidance. PayPal also warned about its outlook on Thursday.
Goldman Sachs’ David Kostin warned U.S. companies will see no earnings growth this year. “Our reduced profit forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for US exporters, disruption to the supply chain for many US firms, a slowdown in US economic activity, and elevated business uncertainty,” said Kostin, the bank’s chief U.S. equity strategist.
The outbreak has also raised questions over potential intervention from central banks around the world. Kevin Warsh, a former Federal Reserve governor, told CNBC’s “Squawk Box” he expects global monetary policy makers to take action soon in response to the virus spreading. However, St. Louis Fed President James Bullard said rate cuts are only a possibility if the coronavirus turns into a pandemic.
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