Wall Street suffered brutal losses Thursday, with the Dow Jones Industrial Average swinging wildly through more than 1,000 points before closing down 1,190 points. It marks the worst week for the blue-chip index since the financial crisis.
The Dow has now lost 3,200 points this week, or 10 percent, including declines of 1,031 points on Tuesday and 879 points on Wednesday.
The S&P 500 fell by 4.4 percent and the Nasdaq Composite was down by around 4.6 percent, putting all three major indices in correction, or a drop of 10 percent from the 52-week high. Transport-related stocks, tech stocks, and the energy sector all took the heaviest hits, as fears spread that the coronavirus epidemic would strangle global movement.
Thursday's roller-coaster ride started even before the opening bell, with Dow futures trading down almost 400 points after the Centers for Disease Control and Prevention confirmed a case of coronavirus in Sacramento County, California. The patient had not traveled to virus-infected areas and was not exposed to anyone who had the virus, the CDC said.
Investors were clearly not assuaged by President Donald Trump's efforts to ease concerns about the spreading epidemic, which has now killed almost 2,800 people around the world. In a news conference on Wednesday night, Trump said his administration has the situation under control and is "ready to adapt" if the virus spreads.
While Trump acknowledged that markets had fallen this week because of coronavirus fears, he said Wednesday that he believed the plunge was likely also due to "the Democrat candidates standing on the stage making fools out of themselves."
Several Wall Street analyst firms issued dire forecasts for 2020 revenues, with Bank of America slashing its annual outlook from 3.1 percent global growth to 2.8 percent, a level last seen in 2009, and Goldman Sachs saying U.S. companies will see zero growth this year due to the epidemic.
"U.S. companies will generate no earnings growth in 2020," the firm wrote in a note to clients on Thursday. "We have updated our earnings model to incorporate the likelihood that the virus becomes widespread."
Former Federal Reserve Chair Janet Yellen said Wednesday the virus could push the U.S. into a recession.
"It is just conceivable that it could throw the United States into a recession," Yellen said Wednesday at an event held by the Brookings Institution. "Market participants will look to the Fed to provide some support," she noted. "The Fed does have some scope — but it will provide a little bit of support to consumer spending and to the U.S. economy and for financial markets.
"We've hit a pocket of fear," Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, told CNBC. "We could be in trouble because, let's face it, the U.S. consumer is what's holding this thing together."
