Dow plunges nearly 4,000 points this week amid Coronavirus fears
NEW YORK — Stocks fell again Friday in another wild day, leaving Wall Street with its worst week since October 2008 as coronavirus fears spread.
The market clawed back much of its intraday losses in the last 15 minutes of trading. Bond prices soared as investors sought safety, pushing yields to record lows. The stock swoon is being driven by fear that the coronavirus outbreak will derail the global economy.
The Dow Jones Industrial Average lost 357 points, or 1.4%, to 25,409. The S&P 500 lost 24 points, or 0.8%, to 2,954. The benchmark index has lost 13% since hitting a record high 10 days ago. The Nasdaq rose 1 point to 8,567.
Overall, the Dow has lost nearly 4,000 points this week.
As markets plunged, Federal Reserve Chair Jerome Powell issued a rare statement Friday, saying the Fed was “closely monitoring” the situation and “will use our tools and act as appropriate” if needed.
“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” Powell said. “The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”
Experts and analysts emphasize it is the uncertainty about the outbreak and its full financial impact that is driving the market volatility.
“Ultimately, it is the uncertainty that is most difficult to price in, so people are selling in the advance of concrete information,” Chris Zaccarelli, the chief investment offficer for Independent Advisor Alliance said Friday.
“Based on what we know now, it remains our belief that the impact to the economy will be severe, but not enough to create a recession,” he added.
Mark Hamrick, the senior economic analyst at Bankrate, noted that for long-term investors, “This jolt is a bump in the road that will eventually only be a memory.”
“As with the outbreak, we cannot be confident of the depth or duration of the market’s decline or the economic impacts in the short-term,” he added in a note Friday. “But also similar to the spread of the virus, we know that it will have a conclusion. It will take some time to arrive at that point.”
Hamrick added that, “long-term investors with the ability and fortitude to remain in the market should do just that.”
“This is for certain: One locks in a loss by selling,” he said.
The plunge comes as the U.S. Food and Drug Administration announced it’s been alerted to the first manufacturing shortage of a drug due to a viral coronavirus outbreak that began in China and has now reached American soil.
Officials also warned Americans earlier this week to prepare for community spread of coronavirus in the U.S., and companies have warned investors of supply chain issues relatd to the outbreak.
