Wall Street’s main indexes tumbled for the seventh straight day and were on track for their biggest weekly dip since the 2008 global financial crisis on worries the fast-spreading coronavirus could lead to a recession.
However, stocks pared losses slightly after the U.S. Federal Reserve Chair Jerome Powell said the fundamentals of the U.S. economy remained strong and that the central bank will act as appropriate to provide support.
Investors were dumping equities and moving to the safety of U.S. Treasuries, pushing 10-year yields to their fourth record low so far this week.
The three indexes had closed more than 10 per cent below their recent record closing highs on Thursday, confirming a correction and the S&P’s fastest in its history.
“You’re almost fishing blind here, trying to make good decisions,” said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management in Scottsdale, Ariz.
As well as waiting for new information about the spread of coronavirus, investors were looking for data showing its economic impact, Kravetz said: “That’s when analysts are going to be able to say they can start readjusting their models for earnings.”
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At 3:03 p.m. ET, the Dow Jones Industrial Average fell 777.34 points, or 3.02 per cent, to 24,989.3, the S&P 500 lost 74.28 points, or 2.49 per cent, to 2,904.48 and the Nasdaq Composite dropped 158.96 points, or 1.86 per cent, to 8,407.52.
At its lowest point in the session the Dow Jones Industrials slumped more than 1,000 points. If the average closes below this level, it would be its fifth 1,000-point decline in history and the third this week.
In Toronto, the S&P/TSX composite, Canada’s largest stock index, plunged for a sixth-straight day, also capping off its worst week since the global financial crisis of 2008.
Rate-sensitive banks were down 3.5 per cent and the financial sector weighed the most on the benchmark S&P 500 index. Utilities, real estate and Consumer Staples — other rate-sensitive sectors that are often seen as safe-havens — were the weakest performers on the day.
“Watching the close today will be a very good sign whether this market is establishing a temporary bottom … if it doesn’t fall off a cliff like the last two Fridays, that’ll be a sign it’s established a short-term bottom,” said Ernesto Ramos, Managing Director, Active Equities at BMO Global Asset Management in Chicago.
“If it spills into the close that’s a bad sign of more pain to come.”
Declining issues outnumbered advancing ones on the NYSE by a 5.56-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 128 new lows; the Nasdaq Composite recorded 16 new highs and 509 new lows.
— With files from the Canadian Press
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