‘It’s bloodshed’: US stocks suffer worst week since 2008 crash as COVID-19 spreads
New York: Coronavirus fears triggered yet another full day of bruising sell-offs on Wall Street which ended Friday with its worst week since the height of the 2008 financial crash even as hand sanitizers, cleaning wipes and protective masks went off the shelves at a furious pace.
“It’s bloodshed,” a Commerzbank analyst exclaimed as markets went into free fall for the seventh straight day.
The Dow Jones Industrial Average crashed more than 12 per cent, oil plunged and gold, oddly enough, joined the rout with its sharpest decline since 2013. The two most valuable companies on the S&P 500, Microsoft and Apple, lost a combined $300 billion as global markets braced for more economic pain.
Oil had its worst week since the financial crisis. The US crude benchmark fell nearly 5 per cent on Friday to close at $44.76 a barrel, the lowest price in more than 12 months. That means cheaper gas for motorists this weekend.
Barely 10 days ago, US stocks seemed insulated from global choppiness and now, everyone’s wondering if schools, offices and factories are going to shutter like in China and Japan, bringing entire economies to their knees.
Goldman Sachs said it was expecting zero corporate earnings growth in 2020, while Bank of America has cut its estimate for global economic growth.
Travel and leisure stocks were worst hit on Friday as governments raised travel warnings and people rushed to cancel travel plans.
Even though the US market climbed back up in the last 15 minutes of trading, investors struggled to assess next steps after the markets’ wild ride.
The stock swoon has hammered every major index into “correction”, meaning a fall of 10 per cent or more from peak levels. The last time this happened was in late 2018 when trade tensions between US and China escalated.
US Federal Reserve Chairman Jerome Powell sought to calm fears with a reassurance that the Fed will “use our tools” to support the economy, signalling a rate cut in March. Market chatter is rising that the Fed may deliver a half point rate cut.
Meanwhile, the virus that is roiling the world economy has pushed the World Health Organization to upgrade risk level of spread to “very high”. Top White House officials were continuing to push the flu-versus-coronavirus messaging.
“The flu kills people,” said acting White House chief of staff Mick Mulvaney. “This is not Ebola. It’s not SARS. It’s not MERS. It’s not a death sentence. It’s not the same as the Ebola crisis.”
Yet, a stock market going down in election year is getting to be a hard sell for the US president who has routinely tied national mood to Wall Street performance.
The Centers for Disease Control and Prevention (CDC) confirmed that two more Americans tested positive for coronavirus, taking the national total to 63.
In the US, it’s still not clear if the number of cases is at what is being called a “low level” because there hasn’t been enough testing. More than 83,000 people worldwide have been infected with the virus, with deaths topping 2,800.
In the US, protective masks and hand sanitizers were disappearing from shop shelves and online marketplaces, malls and shopping areas were quieter, events getting cancelled, schools readying for closures and offices that frowned on remote work were now being forced to reconsider.
In the latest addition to companies freezing travel plans, Amazon asked all of its 800,000 employees to postpone any non-essential travel, both domestic and international.
The market turned south this week after a top CDC official asked Americans to brace for community spread of coronavirus.