Stocks came crashing back to Earth Friday, giving back part of the momentous gains the market piled up over the past three days as investors cast a wary eye on the accelerating coronavirus pandemic and its potential to create new economic troubles down the road.
The Dow Jones Industrial Average fell more than 900 points but posted its biggest weekly increase since 1938, according to The Wall Street Journal.
Even after the rally this week the market is down 25% from the peak it reached a month ago.
A rally this week pushed the S&P 500 up 10% as traders became hopeful that a $2 trillion relief bill would ease the severe economic damage being caused by shutdowns related to the coronavirus.
The House passed the bill Friday afternoon and President Donald Trump sign it later in the day.
The Dow closed down 915.39 or 4.06% to 21,636.78. The NASDAQ composite index closed down 295.16 or 3.79% to 7,502.38. The S&P 500 fell 88.60 or 3.37% to 2,541.47.
The downward turn began early Friday, with U.S. futures slumping after a mixed day in Asia.
Investors weighed the prospect of a long period of infections that would steadily work against the economic stimulus efforts by world governments.
The Dow was down more than 800 points at the opening bell.
Even after the rally this week the market is down 25% from the peak it reached a month ago. European markets also fell.
On Thursday major Wall Street indexes jumped more than 6%, bringing the S&P 500 up 17% since Monday as a massive coronavirus relief package for the staggering U.S. economy.
Investors had appeared to shrug off miserable news on unemployment following a report that nearly 3.3 million Americans applied for unemployment benefits last week, shattering the prior record set in 1982, as layoffs and business shutdowns sweep across the country.
Germany's DAX fell 3.2% to 9,687 while the CAC 40 in Paris gave up 4% to 4,363. Britain's FTSE 100 sank 4.6% to 5,551 81.51 after Prime Minister Boris Johnson was diagnosed positive for the virus. The future contract for the S&P 500 was down 2.7% and the future for the Dow industrials lost 2.6%.
“Rallies don’t last forever and clearly investors are happy to call time on this one as we head into another uncertain weekend,” Craig Erlam of Oanda said in a report.
“We may have had a good run this week but the weekend can feel like a long time at moments like this and the numbers we’re getting from the U.S., which now has more cases than China or Italy, are getting uglier by the day,” he said.
Oil continues slide
Benchmark crude oil fell $1.09 to close at $21.51 a barrel Friday. Brent crude oil, the international standard, fell $1.41 to $24.93 a barrel.
Wholesale gasoline rose 3 cents to 57 cents a gallon. Heating oil rose 2 cents to $1.07 a gallon. Natural gas fell cent to $1.63 per 1,000 cubic feet.
Gold fell $26.20 to $1,625 an ounce, silver fell 14 cents to $14.53 an ounce and copper fell 1 cent to $2.17 a pound.
The dollar fell to 107.76 Japanese yen from 109.22 yen. The euro rose to $1.1117 from $1.1041.
Thursday’s bad news on unemployment was expected and followed earlier gains after Congress and the Federal Reserve promised an astonishing amount of aid for the economy and markets, hoping to support them as the outbreak causes more businesses to shut down by the day.
The $2.2 trillion coronavirus relief plan signed by Trump Friday includes direct payments to U.S. households and aid to hard-hit industries.
The prospect of a big financial shot in the arm for businesses and households helped offset some of the concerns about the steep job losses the economy is beginning to see due to the coronavirus.
With the U.S. stimulus bill about a tenth the size of the U.S. economy, “it remains difficult to imagine what this could do in the longer term in terms of restoring confidence once again without a material improvement of the coronavirus landscape," Jingyi Pan of IG said in a commentary.
Still, Asian markets mostly rose as governments tightened controls on businesses and travel, seeking to contain the pandemic.
Japan’s Nikkei 225 index surged 3.9% to 19,389.43, while South Korea’s Kospi jumped 1.9% to 1,717.73. The Hang Seng in Hong Kong advanced 0.6% to 23,484.28, while the Shanghai Composite index edged 0.3% higher to 2,772.20. Shares fell in Taiwan but rose in Southeast Asia.
India’s Sensex rebounded, gaining 0.7% to 30,148.36 after the central bank slashed its key lending rate to a decade-low 4.4% from 5.15% to help the economy weather a lockdown aimed at beating the outbreak in the world's second most populous country. Sydney's S&P/ASX 200 slipped to 4,842.40.
So far, though, there’s no been reassurance on the spread of the pandemic.
The United States has reported more than 85,000 known cases, and the worldwide number of infections has topped a half-million, according to Johns Hopkins University.
Despite strong rallies this week, analysts say further big drops are to be expected until there have been enough sustained gains in the market, and progress in fighting the pandemic, to ease investors' fear of further declines.
— ArLuther Lee contributed to this report for The Atlanta Journal-Constitution.
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