U.S. Stocks Experience Worst Week Since The Financial Crisis

After experiencing yet another sell-off early in the session, stocks fluctuated over the course of the trading day on Friday. The major averages largely maintained a negative bias, although the tech-heavy Nasdaq ended the day nearly unchanged.

While the Nasdaq inched up 0.89 points or less than a tenth of a percent to 8,567.37, the Dow tumbled 357.28 points or 1.4 percent to a nearly nine-month closing low of 25,409.36 and the S&P 500 slid 24.54 points or 0.8 percent to a four-month closing low of 2,954.22.

For the week, stocks turned in their worst performance since the 2008 financial crisis. The Dow plunged by 12.4 percent, while the S&P 500 and the Nasdaq plummeted by 11.5 percent and 10.5 percent, respectively.

Stocks regained some ground late in the session after Federal Reserve Chairman Jerome Powell said the central bank will “act as appropriate to support the economy” amid the evolving risks posed by the coronavirus outbreak.

Escalating concerns about the outbreak continued to weigh on the markets, however, as the disease continues to spread across the globe.

New Zealand and Nigeria are among the countries that have recently confirmed their first coronavirus cases, with the World Health Organization warning that the fast-spreading disease could soon reach most, “if not all” countries around the world.

WHO director-general Tedros Adhanom Ghebreyesus recently said the organization has raised its assessment of the risk of spread and the risk of impact of the coronavirus to “very high.”

In addition to the confirmed cases in new countries, the number of cases in countries like China, South Korea and Iran countries to rise.

Reports raising questions about the U.S response to the outbreak added to the negative sentiment even as President Donald Trump continues to downplay the threat posed to the U.S.

The recent sell-off on Wall Street has dragged the major averages into correction territory, with some analysts saying stocks are now oversold after some described them as overbought just a few days ago.

Meanwhile, traders continued to ignore the latest U.S. economic reports, as the data does not reflect the latest developments on the coronavirus front.

Sector News

Gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 5.6 percent to its lowest closing level in three months.

The sell-off by gold stocks came amid a sharp drop by the price of the precious metal, as gold for April delivery plunged $75.80 to $1,566.70 an ounce.

Significant weakness was also visible among housing and banking stocks, with the Philadelphia Housing Sector Index and the KBW Bank Index tumbling by 2.8 percent and 2.5 percent, respectively.

Utilities, commercial real estate and pharmaceutical stocks also saw considerable weakness on the day, while notable strength emerged among energy, biotechnology and software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Friday. Japan’s Nikkei 225 Index and China’s Shanghai Composite Index both nosedived by 3.7 percent, while Hong Kong’s Hang Seng Index slumped by 2.4 percent.

The major European markets also showed substantial moves to the downside on the day. While the German DAX Index plummeted by 3.9 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index tumbled by 3.4 percent and 3.2 percent, respectively.

In the bond market, treasuries extended the rally seen over the past few sessions, pushing the ten-year yield to a new record low. The yield on the benchmark ten-year note, which moves opposite of its price, plunged by 17.2 basis points to 1.127 percent.

Looking Ahead

News regarding the coronavirus outbreak is likely to remain in the spotlight next week, potentially even overshadowing the usually closely watched monthly jobs report.

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