Wall Street Has Worst Week Since 2008 02/28 16:07
Stocks sank again 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.
(AP) -- Stocks sank again 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 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
Global financial markets have been rattled by the virus outbreak that has
been shutting down industrial centers, 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. Market watchers
have said for months that stocks were overpriced and long overdue for another
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 Treasury note fell sharply, to 1.14% from 1.30%
late Thursday. That's a record low, according to TradeWeb. 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. The price of benchmark U.S.
crude has now fallen 15% this week.
"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 more certain that the Federal Reserve will be
forced to cut interest rates to protect the economy, and soon. Goldman said the
Fed's current lack of action amounts to a tightening of rates compared with
other nations and their actions to offset the impact of the coronavirus.
Investors now widely expect the Fed to cut interest rates by a half-point at
its meeting that winds up March 18. According to data from CME, the
expectations for a half-point cut jumped from 47% just before the Fed's
statement was released to 100% shortly thereafter.
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. 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
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 83,000
cases worldwide and related deaths.
Uncertainty turned into fear as the virus started jumping to places outside
of the epicenter 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
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 like stores, restaurants and movie theaters.
The late-2018 stock market plunge, for instance, derailed holiday sales that
year. Now, 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 U.S. expansion going --- to contract again.
Craig Johnson, president of Customer Growth Partners, a consumer
consultancy, says he had expected annual retail sales to be up 4.1%, but he now
says it could increase just 2.2% if the impact of the new virus in China
persists beyond April.
?'This is a moving target right now,"' he said. ?'There is a lot of
Many companies face the prospect of crimped financial results with their
stocks already trading at high levels relative to their earnings. Before the
virus worries exploded, investors had been pushing stocks higher on
expectations that strong profit growth was set to resume for companies after
declining for most of 2019.
Nearly 60 nations representing every continent, except Antarctica, have
confirmed cases. The virus outbreak has prompted a wide range of reactions from
nations hoping to contain its spread and economic impact.
The Geneva auto show was cancelled as Swiss authorities banned large events
of more than 1,000 people. Parts of Italy's northern industrial and financial
center remain under quarantine.
The Dow fell 357.28 points, or 1.4%, to 25,409.36. The S&P 500 slid 24.54
points, or 0.8%, to 2,954.22. The Nasdaq rose 0.89 points, or less than 0.1%,
to 8,567.37. The Russell 2000 index of smaller company stocks lost 21.40
points, or 1.4%, to 1,476.47.
In commodities trading, benchmark crude oil fell $2.33 to settle at $44.76 a
barrel. Brent crude oil, the international standard, dropped $1.66 to close at
$50.52 a barrel. Wholesale gasoline fell 2 cents to $1.39 per gallon. Heating
oil was unchanged at $1.49 per gallon. Natural gas fell 7 cents to $1.68 per
1,000 cubic feet.
Gold fell $75.90 to $1,564.10 per ounce, silver fell $1.27 cents to $16.39
per ounce and copper fell 2 cents to $2.55 per pound.
The dollar fell to 108.42 Japanese yen from 109.95 yen on Thursday. The euro
weakened to $1.0967 from $1.0987.