Wall Street’s sell-off intensifies.
Stocks plunged on Friday, investors rushed to the safety of government bonds, and oil prices nose-dived as financial markets were gripped by another wave of worry over the spreading coronavirus.
The most dramatic move in financial markets Friday was a sharp drop in yields on government bonds. A rush of buying pushed those yields, which move in the opposite direction as prices, down to levels that would have been considered unthinkable just two weeks ago. The yield on the 10-year note was 0.68 percent in early trading in New York.
Such a stark drop reflects near panic, analysts said, given that there was very little news overnight.
A strong report on the American job market on Friday didn’t change the direction of the markets. The U.S. government said employers added 273,000 jobs in February. But the data was a snapshot of a point in time when the prevailing sentiment was that the United States would remain relatively unaffected by the coronavirus.
For many the question now is how much damage can the virus do to the global economy and its growth prospects for the year.
“The epidemic has already dented anemic global economic growth this year and it can be expected to slow further, then contract, as the fear of the virus takes hold,” said Nigel Green, chief executive of deVere Group, an investment firm.
Factories in China are still struggling to get back up and running. Thousands of flights around the world have been grounded. Supply chains have been snarled, shaking some of the world’s biggest companies and forcing an untold number of workers to stay home.
“Against this backdrop, we should prepare for a short-term but severe global recession,” Mr. Green said.
Shares in Europe were also sharply lower: In London, the FTSE 100 index was down more than 3 percent on Friday. Germany’s DAX index was 3.4 percent lower, and France’s CAC 40 index fell 3.6 percent.
In Tokyo, Hong Kong and Seoul, markets closed more than 2 percent lower. In the mainland Chinese cities of Shanghai and Shenzhen, markets fell about 1 percent. An index of China’s biggest companies listed in Hong Kong dropped by nearly 2 percent.
The jobs report shows a burst of hiring before the coronavirus outbreak.
For the second month in a row, the United States economy churned out a blockbuster number of jobs, the government reported Friday, an impressive showing in an era of slow-and-steady employment growth.
Employers added 273,000 jobs in February. Analysts had expected a gain of about 165,000, according to MarketWatch.
But with the coronavirus outbreak shaking economic confidence, the solid showing may not be a harbinger of continued strength.
Every jobs report looks backward, but February’s report captures a particularly unusual moment before the market was gripped with anxiety about the global impact of a widening epidemic.
“There is a red line in the calendar,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The value of it is that this report gives us kind of a benchmark of where we were before things began to go wrong.”
Oil prices dive as OPEC and Russia fail to agree.
Oil prices plummeted Friday as major producers meeting in Vienna failed to reach an agreement to reduce production, as concerns about coronavirus’s impact on the economy spread across the globe.
Brent crude fell by about 9 percent, as low as $45.37 a barrel, a two-and-a-half-year low. West Texas Intermediate crude, the U.S. benchmark, was as low as $41.92 a barrel.
Oil prices have fallen more than 20 percent since early January when China, a major importer of oil, started confronting the emerging coronavirus outbreak.
The Organization of the Petroleum Exporting Countries and other producers, including Russia, were meeting to try to steady the prices by reducing output beyond cuts that were already approved. But the producers struggled to reach an agreement during the meetings, which were in their third day on Friday.
The Fed quarantines cash.
The Federal Reserve is keeping cash coming from Asia under a quarantine, and stands ready to extend that effort to money coming in from other countries as deemed necessary.
Dollars that have returned to the United States from Asia, where the coronavirus first surfaced and where it has taken hold most dramatically, have been held for a minimum of 7 to 10 days since Feb. 21., a Fed spokeswoman said.
If the Centers for Disease Control and Prevention or State Department determine that other countries could also present a risk, the Fed is prepared to extend its new procedures to other incoming cash. And they have a contingency supply of fresh currency at the ready to swap into the financial system, if needed, the spokeswoman said.
While the coronavirus seems to transmit primarily person-to-person, much is still unknown about how it jumps from person to person. The CDC says “it may be possible” to contract the virus from surfaces or objects touched by an infected person.
Microsoft reports two cases in the Seattle area.
Microsoft said late Thursday that two employees in the Seattle area have been diagnosed with coronavirus, the first known cases at the company, which is one of the region’s largest employers.
“The affected employees remain in quarantine, and we are supporting them as they recover,” Microsoft executive Kurt DelBene said in an email to employees obtained by The Times.
The email said one of the employees worked at a building in Microsoft’s headquarters campus at the time the employee developed symptoms. The other, who worked at LinkedIn, had no known contact with other employees.
The Seattle area is the first region in the United States where the authorities have issued sweeping recommendations that people stay home to slow the spread of coronavirus. In Washington State, 13 people have died of coronavirus. More than 60 other people have been treated for the virus in the state, leading state officials to declare an emergency.
Here’s what else is happening.
Ziehl-Abegg, a German maker of high-performance electric fans, has effectively forbidden its employees from going on vacation in the region of Italy known as South Tyrol, a popular destination for skiers, because of coronavirus danger.
On Thursday, Starbucks warned that its quarterly same-store sales in China, where it has a huge presence, would fall 50 percent compared to last year, resulting in a $400 million to $430 million hit to its revenue forecast.
The Federal Reserve Bank of New York president, John C. Williams, said on Thursday that officials viewed the emergency rate cut they approved earlier this week as part of an international push to cushion the economy as the coronavirus threatens global growth. The move came shortly after a call between finance ministers and central bankers from the Group of 7, which also includes Britain, Canada, France, Germany, Italy and Japan.
Reporting was contributed by Matt Phillips, Jeanna Smialek, Alexandra Stevenson, Stanley Reed, Patricia Cohen, Karen Weise, Kirk Johnson and Jack Ewing.