NEW YORK (AP) – And the US stock market is shrinking.
The S&P 500 fell about 2% at midday on Thursday, and treasury yields fell to record lows as the market rebounded to fear the effects of a fast-spreading virus as it traded. last yo-yo movement. A day earlier, stocks had skyrocketed, in part in the hope that more aggressive measures from governments and central banks around the world could help contain the economic fallout.
Get used to such vicious oscillations, which will likely continue as long as the number of new infections continues to accelerate, say many analysts and professional investors. Just during Thursday’s session, the S&P 500 fell 2.9% in the morning before recovering half of the losses, dropping even lower.
The growing awareness that the spread of infections – and the resulting damage to the economy – should not slow any time 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.
In China, where the number of new infections has slowed considerably, Shanghai-listed stocks have risen nearly 12% since reaching a low on February 3. They are only 1.6% to erase the last of the losses they have suffered. since the new virus started spreading late last year.
Factories in China are gradually reopening, and a return to a sense of normal life could even loom on the horizon following swift and tough action by the government to fight the virus.
But elsewhere in the world, the atmosphere is much darker. There are about 17 times more new infections outside of China than in China, according to the World Health Organization. The spread of epidemics in South Korea, Italy and Iran is responsible for the majority of new infections.
In the United States, the death toll has risen to 11 due to the virus. California declared a statewide emergency on Wednesday, joining Washington, Florida and Hawaii. Southwest Airlines has warned investors that it has seen a significant drop in demand in recent days and an increase in the number of customers canceling trips.
The S&P 500 was down 2.1% at 11:50 a.m. EST. The Dow Jones Industrial Average fell 633 points, or 2.3%, to 26,457, and the Nasdaq fell 1.6%.
If the S&P 500 ends the day down at least 2%, it would be the fourth consecutive day that the index has jumped back and forth, which has not happened since 2011.
The losses were widespread and the 11 sectors that make up the S&P 500 index were down. Financial stocks recorded the largest losses, at 3.4%. .
“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 13.1%, Carnival fell 10.5% and American Airlines Group lost 8.1%.
This is a sharp reversal from the start of this year, when the stock market hit new heights in the hope that the virus could remain contained in China and be just a short-term challenge.
Now that a growing list of companies is warning about how the virus is affecting their sales and profits, investors are left with a lot of uncertainty about the extent of economic growth and corporate profits.
“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 agreement on a $ 8.3 billion bipartisan bill to fight the coronavirus epidemic, and the Bank of Canada followed the surprise drop in interest rates the day before. the Federal Reserve with its own.
Some economists expect the European Central Bank to act in one way or another before its March 12 meeting, and speculation suggests that the Swiss National Bank may follow soon after. The Bank of England meets on March 26 on rates.
Health care stocks received a particularly big boost on Wednesday after Joe Biden’s victories in the state primaries launched him into Democratic presidential nomination contestant status with Bernie Sanders. Many investors believe that Sanders’ health care plan is hurting industry profits.
The Nikkei 225 in Japan rose 1.1%, the Kospi in South Korea gained 1.3% and stocks in Shanghai jumped 2%.
But markets fell as trade moved west in Europe. The French CAC 40 fell 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 0.92% from 0.99% on Wednesday evening. Earlier this week, it was the first time that the 10-year yield fell below 1%. Short-term treasury bill yields fell, with traders increasing bets for more Federal Reserve rate cuts to try to limit economic damage. The two-year Treasury yield fell to 0.57% from 0.62%.
Gold rose as investors crowded into investments considered safe. It increased from $ 18.10 to $ 1,661.10 an ounce.
Crude oil has remained relatively stable after OPEC members proposed a deep drop in production to support prices. Oil has slipped over fears that a global economy weakened by the virus will burn less fuel.
US benchmark crude oil remained stable at $ 46.78 per barrel. Crude oil, the international standard, slipped 14 cents to $ 50.99 a barrel.