Stocks slump as New York enters lockdown
Stocks turned lower on Friday local time, giving up an early rally, after New York became the latest major state to mandate nearly all workers stay home to limit the spread of the coronavirus.
The effect of the coronavirus pandemic on the Dow Jones Industrial Average closed where it stood before Donald Trump was elected president, completely erasing the "Trump bump" that had sent stocks to record highs.
On Friday local time the Dow Jones Industrial Average closed at 19,173.98, down −913.21 (or -4.55 percent).
The S & P 500, the benchmark for many index funds held in 401(k) (superannuation) accounts and the measure preferred by professional investors, was downat close of trading to 2,304.92, down −104.47 (or -4.34 percent).
The Nasdaq closed at 6,879.52 or -3.79 percent.
Investors are weighing the likelihood that the global economy is entering a recession because of the massive shutdowns and lay-offs caused by the outbreak against steps by central banks and governments to ease the economic pain.
Ultimately, investors say they need to see the number of new infections stop accelerating for the market's volatile skid to ease.
"We just don't know what the next two weeks will bring," said Paul Christopher, global market strategist at the Wells Fargo Investment Institute.
"Are we going to follow the same infection curve as other countries and the number infections will drastically accelerate? That's when the storm is going to come."
Investors continued to seek safety in US government bonds, driving their yields broadly lower. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, slid to 0.94 percent from 1.12 percent late Thursday.
In energy markets, benchmark US crude slid 6 percent to US$24.25 (A$41.60) per barrel. The price of gold climbed 1.1 percent.
The mixed start for the US indexes followed solid gains across markets in Europe. Stock markets in Asia closed higher.
Hopes are rising that there will be progress in finding virus treatments and that "a boatload of stimulus by both central banks and governments will put the global economy in position for a U-shaped recovery," said Edward Moya of Oanda in a report.
Members of US President Donald Trump's economic team were convening Friday on Capitol Hill to launch negotiations with Senate Republicans and Democrats racing to draft a US$1 trillion-plus (A$1.72 trillion) economic rescue package amid the coronavirus outbreak.
It's the biggest effort yet to shore up households and the US economy as the pandemic and its nationwide shutdown hurtles the country toward a likely recession.
Airlines, hotels and cruise line operators rose as Congress worked on the economic stimulus bill that would include billions in aid to those industries. United Airlines surged 17 percent and MGM Resorts International jumped 25 percent. Carnival vaulted 23 percent. Despite the big gains, the stocks are still down sharply for the year.
On Thursday, the European Central Bank launched a program to inject money into credit markets by purchasing up to 750 billion euros (A$1422 billion) in bonds.
The Bank of England cut its key interest rate to a record low of 0.1 percent and restarted its own program of money injections into the financial system.
The US Federal Reserve unveiled measures on Thursday to support money-market funds and the borrowing of dollars as investors in markets worldwide hurry to build up cash as insurance against falling asset prices.
Investors are jumpy due to uncertainty about the size and duration of the impact of the coronavirus outbreak and the spreading wave of business shutdowns meant to help contain it.
More than 10,000 people have died. There are more than 246,000 cases worldwide, including nearly 85,000 people who have recovered.
Wall Street has bounced up and down by record-setting margins of up to 12 percent over the past week.
Unease has grown as forecasters say a global recession looks increasingly likely and have cut growth outlooks for the United States, China and other major economies.
Originally published as Stocks slump as New York enters lockdown