· Dow plunges 1,100 points, bringing its decline from a record high to more than 10%
Stocks fell sharply in volatile trading Thursday as investors worried the coronavirus may be spreading in the U.S. A slew of corporate and analyst warnings on the virus dragged down the major averages, tipping them into correction territory.
The Dow Jones Industrial Average plummeted 1,190.95 points, or 4.4%, to close at 25,766.64. The S&P 500 slid 4.4% to 2,978.76 while the Nasdaq Composite dropped 4.6% to 8,566.48. The Dow had its worst day since February 2018 while the Nasdaq and S&P 500 posted its biggest one-day loss since August 2011.
It was also the Dow’s biggest one-day point decline in history, surpassing Monday’s 1,031-point drop. The S&P 500 also closed below 3,000 for the first time since last October.
Thursday’s losses put the Dow, S&P 500 and Nasdaq in correction territory, which is defined on Wall Street as down more than 10% from their a recent high. It took the Dow just 10 sessions to tumble from its all-time high into a correction. The S&P 500 and Nasdaq set record highs last week. The Dow now sits more than 12% below its all-time high.
The Dow and S&P 500 were also on pace for their worst weekly performance since 2008. Through Thursday’s close, the Dow was down more than 11% week to date while the S&P 500 had lost 10.8%.
Worries over how the coronavirus will impact corporate profits and global economic growth overwhelmed the president’s assurances. The stock market has been under pressure all week as the number of confirmed cases increased outside of China. South Korea has confirmed a total of more than 1,700 cases. More than 600 people have contracted the virus in Italy.
The outbreak has also led several companies to issue warnings about its earnings and revenues.
· It took stocks only six days to fall into correction, the fastest drop in history
It took the S&P 500 only six sessions to fall into correction territory, the fastest downfall in history.
The Dow and the S&P 500 each fell 4.4% on Thursday — the Dow lost a record 1,190.9 points — and each closed well in correction territory based on their recent record close. The major averages are on pace for their worst week since the financial crisis as anxiety over the coronavirus continued to drive investors away from equities.
The S&P 500′s swift drop marked the quickest 10% decline from an all-time high in the index’s history, according to Deutsche Bank.
The speed of the decline over the past week even beats the Black Monday plunge in October 1987, where the peak was in August 1987, Torsten Slok, Deutsche Bank’s chief economist said.
There have been 27 market corrections since World War II with an average decline of 13.7% over an average of four months.
There have been 12 bear markets since World War II with an average decline of 32.5% as measured on a close-to-close basis.
The most recent was October 2007 to March 2009, when the market dropped 57% and then took more than four years to recover. The S&P 500 closed in a bear market in December 2018 using intraday data.
Bear markets have lasted 14.5 months on average and have taken two years to recover on average.
· European stocks close 3.6% lower and enter correction territory amid coronavirus fears
European stocks closed sharply lower Thursday as the rapid spread of the coronavirus weighed heavily on market sentiment.
The pan-European Stoxx 600 closed 3.6% lower provisionally, officially entering correction territory as it was off more than 10% from its record high notched on Feb. 19 last year. The index also hit a 4-month low, while all the major indexes were firmly in the red. Germany’s DAX finished lower by 3.1%, Britain’s FTSE was down 3.5%, while France’s CAC 40 fell 3.2%.
· Japan stocks lead major losses across Asia markets, diving more than 3%
Stocks in Asia declined in Friday morning trade as fears over the spread of the coronavirus globally drove investors to safety.
Japanese stocks led losses among major markets regionally as the Nikkei 225 dropped 3.28% while the Topix index fell 3.03%.
Data on Friday showed retail sales in Japan declining 0.4% year-on-year in January. That compared against a median market forecast for a 1.1% decline, according to Reuters.
Mainland China stocks also tumbled in early trade, with the Shanghai composite down more than 1% and the Shenzhen component 2.08% lower. The Shenzhen composite slipped 2.067%. Hong Kong’s Hang Seng index also dropped 2.2%.
Meanwhile, South Korea’s Kospi was down 2.22% while the S&P/ASX 200 in Australia plunged 2.93%.
Overall, the MSCI Asia ex-Japan index dropped 1.54% lower.
The rapid spread of the coronavirus outside of China, where the disease was first reported, has weighed on sentiment in recent days over its potential impact on economic growth and corporate earnings. In South Korea, more than 1,700 cases of infection have been confirmed, while over 600 people have contracted the virus in Italy so far.
Reference: Reuters, CNBC
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