Stocks Tumble With Credit Cracks Showing on Virus: Markets Wrap

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(Bloomberg) — U.S. stocks plunged, Treasury yields sank and credit markets suffered the worst day in a decade with fears mounting that the government response to the spreading coronavirus won’t prevent an economic slump.

The S&P 500 Index’s two-day rout hit 6%, wiping out gains from earlier in the roller-coaster week, as the spreading virus shook investor confidence in the world’s largest economy. Treasuries fell to all-time lows, with the 10-year yield dropping as far as 0.66%. The dollar slid for the sixth time in seven days. Oil plunged more than 8% as OPEC+. A derivatives index that investors use to hedge against losses rose the most since at least 2011.

Investors have grown increasingly anxious that the Trump administration’s preference for forgoing fiscal stimulus in favor of pressuring the Federal Reserve into more action will fall short of propping up the economy as airlines cancel routes and events get delayed around the nation.

“As long as we’re seeing cases climb, it’s going to drive volatility in the market,” Shawn Cruz, manager of trader strategy at TD Ameritrade, said by phone. “What you’re seeing is almost a coordinated response to try to counteract that drop in sentiment, the fear of what the actual economic impact’s going to be.”

While concerted efforts from central banks and governments to soften the blow from the virus spurred gains across equity markets earlier in the week, investors are back to taking risk off the table and piling into the world’s safest and most liquid assets. The number of coronavirus cases globally surpassed 100,000 as more infections were reported in the Europe and Iran.

Markets mostly shrugged off the latest U.S. jobs report, which showed the biggest gain in nearly two years, because it only reflected conditions before the virus outbreak began snarling global supply chains and intensified across America.

These are the main moves in markets:

Stocks

  • The S&P 500 Index dropped 3% as of 12:24 p.m. New York time.
  • The Index fell 3%.
  • The Index fell 3.1%.
  • Germany’s fell 2.8%.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%
  • The British pound increased 0.6% to $1.3036.
  • The euro advanced 0.6% to $1.1306.
  • The Japanese yen strengthened 0.7% to 105.42 per dollar.

Bonds

  • The yield on 10-year Treasuries fell 15 basis points to 0.77%.
  • The yield on two-year Treasuries declined 14 basis points to 0.46%.
  • Germany’s 10-year yield decreased three basis points to -0.71%.

Commodities

  • West Texas Intermediate crude fell 6.8% to $42.71 a barrel.
  • Gold fell 0.8% to $1,655.30 an ounce.
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