U.S. stocks, bond yields and oil prices dropped sharply again Friday, extending a roller coaster week as investors continued to weigh the global economic disruption from the virus outbreak.
The Dow Jones industrial average dropped 256.50 points to close at 25,864.78, cutting losses after briefly sliding nearly 900 points. The Standard and Poor’s 500 declined 1.7% to end at 2,972.37, putting the broad index off 12% from its recent high. The technology-heavy Nasdaq Composite fell 1.9% to finish at 8,575.62 . All three major indexes eked out weekly gains.
The declines came even as U.S. employers added 273,000 jobs in February despite a slowing economy, worker shortages and early coronavirus fears. Economists warn, however, that cautious businesses, weary workers and the absence of coordinated policy responses to the virus could weigh on economic growth in the first half of the year.
“The February jobs report showed remarkably healthy labor market fundamentals prior to the coronavirus outbreak,” Gregory Daco, chief U.S. economist at Oxford Economics, said in a note. “But, while strong employment and steady wage gains have boosted consumers’ immune system, the virus is all but certain to infect their willingness to spend.”
Markets have endured roller coaster ups and downs for weeks amid uncertainty over how much damage the outbreak of the new coronavirus will do to the global economy.
The worldwide total of coronavirus cases surpassed 100,000 on Friday. The rise in the number of infections globally, along with ongoing disruptions to supply chains threatens to have a “deeper and longer-lasting restraint” on U.S. growth, Lindsey Piegza, chief economist at Stifel Nicolaus, said in a note.
That could put the Federal Reserve in a position to cut interests rates further to help cushion the economy, Piegza says. The Fed surprised Wall Street and cut rates Tuesday, the first such move outside of a regularly scheduled meeting since the global financial crisis in 2008.
Rumors that Chinese officials might be overstating the extent to which local businesses are getting back to work also were undermining confidence, traders said.
“At this point no one can really explain why the markets behave the way they do, and what may be next. The only thing we can say is this high volatility is bad,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
Bond yields slumped to new lows Friday as traders expected central banks to have to cut interest rates and flocked to government debt as a haven of safety.
The 10-year Treasury yield falls when investors are worried about a weaker economy and inflation ahead, and it fell below 0.70% during the morning. Earlier this week, it had never in history been below 1%. It was at 1.90% at the start of the year, before the virus fears took hold.
The yield on the 10-year Treasury dropped to 0.73% from 0.92% late Thursday.
Crude oil lost 10% after OPEC and key ally Russia failed to agree Friday on a cut to oil production, a move that would have contained the plunge in the price of crude caused by the new coronavirus outbreak’s massive disruption to world business.
The price of crude has fallen over 25% since the start of the virus outbreak.
In Europe, France’s CAC 40 shed 4.1%, while Germany’s DAX fell 3.4%. Britain’s FTSE 100 shed 3.6%. Japan’s benchmark Nikkei dived 2.7%. Australia’s S&P/ASX 200 lost 2.8%. Hong Kong’s Hang Seng declined 2.3%.
Contributing: The Associated Press
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