Stocks opened sharply lower on Friday but had bounced back from their lows by midday. The Dow (INDU)
was 560 points, or 2.2%, lower around noon, while the S&P 500 (SPX)
— the broadest measure of the stock market — was down 2.7%. The Nasdaq Composite (COMP)
dropped 2.8%. Thursday’s trading session
was even more brutal.
All three indexes are in correction territory on Friday — that’s when the index falls 10% below its most recent peak. They first entered corrections last week
and then bounced in and out during the following sessions.
As stocks tumbled, CNN Business’ Fear and Greed Index
remained in “extreme fear” territory. The VIX volatility index (VIX)
soared another 20% and earlier hit its highest level since exactly 11 years ago — March 6, 2009, the day the financial crisis bear market reached its nadir
. The Dow briefly fell below 6,500 points that day. On Friday, the Dow opened just above 25,000 points.
Investors poured money into safe-haven assets: US Treasury bond buying skyrocketed, and the 10-year yield
fell below 0.7% to a new record low. The Japanese yen strengthened once again against the US dollar, gaining nearly 1% Friday.
Gold prices rallied earlier in the day and were up as much as 1% before giving up their gains as commodities got slammed more broadly and US oil prices declined 8%. The S&P GSCI (GSG)
— a major commodity index that also includes gold — was down nearly 5%.
The US Labor Department said Friday that the US economy added 273,000 jobs
in February. Coronavirus fears hadn’t yet fully taken hold when the jobs survey was completed in mid-February, so economists had expected that a reasonably large number of jobs were added to the US economy last month. But the strong report blew away expectations.
That’s positive news for the US economy, because March’s report could be ugly
. Still, stocks remained sharply lower.
US oil is down 8% Friday to just over $42.24 a barrel on reports that Russia will not sign up to OPEC’s new plan to slash crude output
. The oil cartel on Thursday said it would reduce output by 1 million barrels per day — on top of existing cuts — and it asked non-cartel allies, including Russia, to cut a total of 500,000 barrels per day.
Russia and OPEC are meeting Friday, but Moscow disagrees with the cartel’s proposal, according to the Wall Street Journal
. That uncertainty sent oil sharply lower. Oil is in a deep bear market and demand has plummeted during the coronavirus outbreak. Fewer people are traveling, reducing fuel usage.
What a week
Despite Friday’s selloff, stocks are right around where they closed last Friday, and they could still end the week positive. That’s how crazy the past few days have been. Tuesday’s near-800-point drop in the Dow
was sandwiched by two gains of more than 1,100 points
on Monday and Wednesday. Thursday, the Dow fell by almost 1,000 points
The push and pull has sent investors into a tizzy. Coronavirus has upended some of the world’s largest economies, and no one knows how long the downturn will last. Some central banks, including the US Federal Reserve, have responded with economic stimulus, but the Fed’s surprisingly large emergency rate cut
this week unnerved investors.
They worry that no monetary policy action can make coronavirus-averse consumers want to travel or go out to concerts or malls. The Fed can’t force sick workers back to factories or offices.
“Does coronavirus negatively impact the supply chain, cause massive demand uncertainty in the near-term around consumers/enterprises, and ultimately add a major risk profile to valuations?” asked Dan Ives, analyst at Wedbush Securities, in a note to investors Friday morning. “The answer is a clear YES.”
As Friday morning proves, stocks may have plenty of ground left to give up before coronavirus fears subside.