NEW YORK – Fear dominated the financial markets again on Thursday, and stocks fell sharply due to concerns over the rapid spread of the virus. It’s the last thrill of the craziest week on Wall Street in more than eight years.
Major US indices lost about 3.5%, and Treasury bond yields hit more record lows during their last yo-yo move. The slide almost offset the surge in stocks that had risen a day earlier, which is partly due to the hope that moves by authorities around the world could cushion the economic fallout.
Many analysts and professional investors argue that these vicious oscillations are unlikely to continue until the number of new infections continues to accelerate. Thursday was the fourth consecutive day that the S&P 500 had risen at least 2%, the longest period of its kind since the summer of 2011.
The growing understanding that the spread of infections – and the resulting damage to the economy – is not expected to slow anytime soon is drawing heavily on the markets. This trend has been reversed this week with the increasingly global pressure that governments and central banks are trying to give to the markets through spending plans and interest rate cuts.
“It has been a roller coaster market in recent days for equity investors, and today we seem to be on the downside,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “What you need is time, and unfortunately, it will still lead to volatility.”
In China, where the number of new infections has slowed considerably, stock market transactions in Shanghai have increased by almost 12% since reaching a low on February 3. Factories are gradually reopening there, and a return to a sense of normal life may even be on the horizon as a result of the government’s swift and severe actions to fight the virus.
But elsewhere in the world, the atmosphere is darker. There are about 17 times more new infections outside of China than in China, according to the World Health Organization.
In the United States, the death toll has risen to 11 due to the virus. California has declared a statewide emergency and Southwest Airlines has warned investors that it has seen a significant drop in demand in recent days.
The S&P 500 fell 106.18, or 3.4%, to 3,023.94. The Dow Jones Industrial Average fell 969.58, or 3.6%, to 26,121.28, and the Nasdaq fell 279.49, or 3.1%, to 8,738.60.
The losses were widespread and the energy values of the S&P 500 fell to their lowest level since March 2009, as they emerged from the financial crisis.
“The western world is now following part of China’s textbook, closing schools and declaring a state of emergency for example, but it seems to be too little, too late,” said Chris Beauchamp, chief analyst at market at IG.
Travel-related businesses continued to fall sharply, fearing that frightened customers might want to confine themselves to planes or boats with others. Royal Caribbean Cruises fell 16.3%, Carnival fell 14.1% and American Airlines Group lost 13.4%.
A growing list of companies is warning investors that the virus is affecting their sales and profits, and investors are left with great uncertainty about the extent of economic growth that will be affected.
“We could probably drive a metaphorical truck between positive and negative cases here,” said Jason Pride, director of private wealth investments at Glenmede.
Asian stock markets started higher on Thursday, riding the wave of optimism and hope that boosted the S&P 500 by 4.2% on Wednesday. Congressional leaders reached an agreement on an $ 8.3 billion bill to fight the epidemic, which the Senate passed on Thursday, and the Bank of Canada followed the surprise rate cuts the day before interest of the Federal Reserve with its own.
Some economists expect the European Central Bank to act in one way or another in hopes of supporting the markets before its March 12 meeting.
The Nikkei 225 in Japan rose 1.1%, the Kospi in South Korea gained 1.3% and stocks in Shanghai jumped 2%.
But the markets went down as trade moved to Europe. The French CAC 40 lost 1.9%, the German DAX lost 1.5% and the FTSE 100 in London fell 1.6%.
Several measures of fear in the market tightened.
The 10-year Treasury yield fell to 0.91% from 0.99% on Wednesday evening. It had previously reached 0.901% for the first time in history, according to Tradeweb. Gold rose from $ 25.00 to $ 1,668.00 an ounce as investors grouped together in investments considered safe.
US benchmark crude oil lost 88 cents to $ 45.90 a barrel. Crude oil, the international standard, fell from $ 1.14 to $ 49.99 a barrel.
Silver rose 15 cents to $ 17.39 an ounce, and copper lost a penny to $ 2.57 a pound. Natural gas lost 6 cents to $ 1.77 per 1,000 cubic feet, fuel oil fell 4 cents to $ 1.49 per gallon, and wholesale gasoline lost 3 cents to $ 1.52 per gallon.
The dollar fell to 106.76 Japanese yen from 107.33 yen on Wednesday. The euro strengthened at $ 1.1190 against $ 1.1139.
AP Business editor Yuri Kageyama contributed.