The culture of fear ignited by COVID-19 saw stocks on Wall Street take another pummeling Friday, setting the seal on the worst week for U.S. equities since the Great Recession of 2008. Globally, the volatility created by COVID-19 eliminated more than $7 trillion from the value of stock markets over the five trading days this week.
On Friday, the 30-stock Dow Jones Industrial Average lost 357.28 points, or more than 1%, to 25,409.36. It sank briefly by more than 1,000 points but staged a furious rally towards the end. The S&P 500 slid 0.82% to 2,954.22. It was another story for the NASDAQ Composite, which fell as much as 3.5% on the day before closing 8,567.37, up a mere 0.010%. All three indices closed in correction territory, which is defined as a decline of at least 10%, but not more than 20%, from a recent peak.
For the week, the Dow fell more than 12% -- its biggest weekly percentage loss since 2008. Friday was the seventh straight day of losses for the Dow. Looked at from a points basis, the Dow yielded more than 3,500 points, by far its largest weekly point loss in history. It also ended the week in correction territory, down 14.1% from an intraday record high set only last February 12.
The Dow entered a 10% correction on February 27 when it closed at 25,766.64 over investor fears about the impact of the COVID-19 outbreak spreading into the U.S. A bear market in expansion, while incongruous, is now being held as a possibility.
The benchmark S&P 500 lost 11.5% week to date in its worst weekly performance since the Great Recession of 2008. It's off 13% from its high just last week. The NASDAQ lost 10.5% this week and was nearly 13% below a record high.
Only a single stock of the 30 on the Dow escaped the flood of red. The correction was expected, but the wide extent and the speed at which it occurred was breathtaking.
A late rally that saw Dow stocks pull back from more than 1,000 points lower to finally touch down at 357.28 was positive but did nothing to allay fears this historic rout won't continue Monday. Already, futures for Monday point to another steep decline.
A welcome announcement by the U.S. Federal Reserve Thursday it will "act as appropriate" to support the economy amid the coronavirus outbreak was negated by the World Health Organization (WHO), which on the same day announced it's increased its alert level for COVID-19 to "very high at a global level."
The Dow's hell week saw stocks lose 1,031.61 Monday, yield 879.44 points Tuesday, recover somewhat to close 123.77 points lower Wednesday before plunging 1,190 points Thursday -- the largest single-day loss in its history. Seen in this light, Friday's 357.28 points loss can be viewed as a welcome recovery.
"The reason it happened so quickly is because the momentum going up was so great," said Liz Ann Sonders, chief investment strategist at Charles Schwab. "The hedge funds, the algorithmic trading, the quants: They play on momentum."
The Friday beating ends a month that saw Wall Street swing from record highs to plumb record lows in a most incredible display of volatility. The Dow lost 10% in February, and the S&P 500 yielded 8.4% while the NASDAQ lost 6.4%.
"Probably one of the biggest issues of this selloff is that it's coming at the end of the month," said Kent Engelke, chief economic strategist at Capitol Securities Management, in an interview. "I really think many people have not recognized the carnage that's taken place. The question is, what are people going to do when they look at their monthly statements on March 1?"
Previous comments by president Donald Trump COVID-19 will somehow miraculously disappear on its own after a few did nothing to assuage anxious investors that again fled to the safety of bonds and gold.
"One day it's like a miracle, it will disappear ..." said Trump of COVID-19, adding, "maybe it will go away." Trump then went on to brag about his alleged "tremendous success" in controlling COVID-19 in the U.S.
Efforts by Trump's surrogates to deflect attention away from the tanking stock market included acting White House chief of staff Mick Mulvaney blaming the media for exaggerating the crisis and plunging the stock market to historic lows.
