Wall Street has worst week since 2008 as coronavirus fears rattle markets

Stocks sank again on Friday after another wild day on Wall Street, extending a rout that handed the market its worst week since October 2008 at the height of the financial crisis.

The market clawed back much of its intraday losses in the last 15 minutes of trading as some buyers emerged, keeping the indexes from another steep plunge.

The Dow Jones Industrial Average swung back from an early slide of more than 1,000 points to close around 350 points lower. The S&P 500 fell 0.8%, while the Nasdaq reversed an early decline to finish flat.

The market’s losses moderated somewhat after the US Federal Reserve released a statement saying it stood ready to help the economy if needed.

Investors increasingly expect the Fed to cut rates at its next policy meeting in mid-March.

Global financial markets have been rattled by the virus outbreak that has been shutting down industrial centres, emptying shops and severely crimping travel all over the world.

More companies are warning investors that their finances will take a hit because of disruptions to supply chains and sales.

Governments are taking increasingly drastic measures as they scramble to contain the virus.

The rout has knocked every major index into what market watchers call a “correction”, or a fall of 10% or more from a peak.

The last time that occurred was in late 2018, as a tariff war with China was escalating.

Bond prices soared again as investors sought safety and became more pessimistic about the economy’s prospects. That pushed yields to more record lows.

The yield on the 10-year US Treasury note fell sharply, to 1.16% from 1.30% late on Thursday. That yield is a benchmark for home mortgages and many other kinds of loans.

Crude oil prices sank 4.9% over worries that global travel and shipping will be severely crimped and hurt demand for energy.

“All this says to us is that there are still a lot of worries in the market,” said Gene Goldman, chief investment officer at Cetera Financial Group. “We need the Fed to come out and say basically guys, we got your back.”

Traders have been growing increasingly certain that the Federal Reserve will be forced to cut interest rates to protect the economy, and soon.

The damage from a week of almost relentless selling was eye-popping: The Dow Jones Industrial Average fell 3,583 points, or 12.4%.

Microsoft and Apple, the two most valuable companies in the S&P 500, lost a combined 300 billion dollars.

In a sign of the severity of the concern about the possible economic blow, the price of oil sank 16%.

The latest losses have wiped out the S&P 500’s gains going back to October. The benchmark index is still up 6.1% over the past 12 months, not including dividends.

The sell-off follows months of uncertainty about the spread of the virus, which hit China in December and shut down large swaths of that nation by January.

China is still the hardest-hit country and has most of the 85,000 cases worldwide and related deaths.

Uncertainty turned into fear as the virus started jumping to places outside of the epicentre and dashed hopes for containment.

“Fear is a stronger emotion than hope,” said Ann Miletti, head of active equity at Wells Fargo Asset Management. “This is what we’re seeing today and this week and over the past seven days.

Airlines have suffered some of the worst hits as flight routes are cancelled, along with travel plans.

Big names like Apple and Budweiser brewer AB InBev are part of a growing list of companies expecting financial pain from the virus.

Dell and athletic-wear company Columbia Sportswear are the latest companies expecting an impact to their bottom lines.

Cruise operators have also been hard hit, with shares sinking 30% or more as shipboard infections rose. But those companies were having a far better day on Friday, with some on Wall Street believing that the sell-off was overdone.

Shares of Royal Caribbean Cruises rose 4.4%, while Norwegian Cruise Line Holdings gained 7.3%. Carnival’s shares climbed 5.1%.

A big concern investors have is that the stock market rout could have a psychological effect on consumers, making them reluctant to spend money and go to crowded places such as stores, restaurants and cinemas.

Analysts are worried that the latest stock swoon could cause consumer spending — which makes up some 70% of the economy and has played a huge role in keeping the US expansion going — to contract again.