U.S. stocks fall, bonds surge on coronavirus fears
U.S. stocks dropped as volatility sparked by the spread of the coronavirus woes continued to grip financial markets. Treasury yields sank to record lows as haven assets remain in demand.
The S&P 500 fell more than 1.9%, as wild swings pile up. The measure has notched three 4% moves since its February record and two other 3% drops in the most volatile stretch since the week after S&P Global Ratings cut the U.S. debt rating in 2011. Banks led losses.
Sentiment took a hit after more cases of the virus popped up across the U.S., including in New York, and California declared a state of emergency. European shares slid as companies warned the epidemic would hurt results.
The 10-year yield sank to a record 0.93%, while the dollar dropped against the yen and the euro. Gold advanced, and oil edged lower as OPEC debated output cuts to battle the impact of the virus.
"If you think about what market volatility means, it's lots of people moving at the same time. When you have a 4.5% up day and a 2% down day -- what does that mean?" Kathryn Kaminski, chief research strategist at AlphaSimplex Group LLC, said on Bloomberg Television. "It means we don't know what's going on."
Risk assets have whipsawed this week, with traders still on edge amid a rise in virus cases around the world and governments extending quarantines and travel restrictions. An industry association warned the outbreak could cost airlines as much as $113 billion in lost revenue. The S&P 500 has rebounded since the Federal Reserve pledged action on Friday, but it remains about 7.5% below last month's all-time high.
In Asia, the main equities benchmark headed for a fourth straight gain. Surging Chinese stocks have now erased the last of their declines triggered by the outbreak.
These are the main moves in markets:
Stocks:
— The S&P 500 Index dropped 2% as of 11:35 a.m. New York time.
— The Stoxx Europe 600 Index fell 1.4%.
— The MSCI Asia Pacific Index gained 1.3%.
Currencies:
— The Bloomberg Dollar Spot Index declined 0.2%.
— The euro climbed 0.4% to $1.1179.
— The British pound gained 0.4% to $1.2927.
— The Japanese yen strengthened 0.7% to 106.78 per dollar.
Bonds:
— The yield on 10-year Treasuries sank 12 basis points to 0.93%.
— The yield on two-year Treasuries decreased 12 basis points to 0.57%.
— Germany's 10-year yield fell three basis points at -0.67%.
Commodities:
— West Texas Intermediate crude fell 0.3% at $46.63 a barrel.
— Gold strengthened 1% to $1,659.80 an ounce.
