Stocks Crushed Again as Selloff Intensifies, Fed Says It Will Act ‘Appropriately’

February 28, 2020 World Comments Off on Stocks Crushed Again as Selloff Intensifies, Fed Says It Will Act ‘Appropriately’ 0 Views

Stocks extended declines Friday amid the worst week for world stocks since the 2008 financial crisis.
Coronavirus update: 2,788 deaths in China and 78,824 confirmed cases. Globally, there are 2,867 deaths and 83,867 confirmed cases.
Clorox is Real Money’s Stock of the Day. The disinfectant maker has stepped up production on demand for its hand sanitizers and disinfectants amid the virus outbreak.

Stocks extended declines Friday amid the worst week for world stocks since the 2008 financial crisis as investors prepared for what could be a global coronavirus pandemic.

The Dow Jones Industrial Average slumped 944 points, or 3.66%, to 24,822, the S&P 500 was down 3.1% and the Nasdaq fell 2.48%. At one point Friday the blue-chip Dow had fallen more than 1,000 points.

Leading the Dow lower Friday were Boeing (BA) – Get Report, McDonald’s (MCD) – Get Report and JPMorgan Chase (JPM) – Get Report.

Stocks in Asia closed lower and European stocks fell 3.8% on the day and 12.7% for the week following a drop of nearly 1,200 points for the Dow in Thursday’s session, the second time this week the blue-chip index has slumped more than 1,000 points.

The Dow’s drop Thursday of 1,190.95 points was its largest one-day point drop in history.

With Moody’s Investors Service warning of the potential for a coronavirus-led global recession, supply chains disrupted by China’s ongoing health crisis and the lingering effects of its trade war with the United States, and government bond yields around the world testing all-time lows, risk appetite was in short supply Friday. Gold prices, a safe-have asset, were on track for their third straight monthly gain.

“The markets are terrified that the disruption is going to hit GDP and then will hit profits at some stage,” Andrew Freris, CEO of Ecognosis Advisory Co. in London,
told Bloomberg. “The only thing central banks can do is cut interest rates, and cutting interest rates isn’t going to do anything to restore the supply disruption in individual
countries.”

Benchmark 10-year U.S. Treasury bond yields hit an all-time low of 1.15% in overnight trading and was holding in that area Friday as investors bet on support from the Federal Reserve amid the fastest correction on record for the S&P 500.

Federal Reserve Chairman Jerome Powell said the central bank was “closely monitoring” developments and said it would act when appropriate. Powell noted the coronavirus poses “evolving risks” but that the U.S. economy remained strong.

“Fundamentals are being pushed to the wayside as the market moves beyond hype and is beginning to price in a tangible deceleration in growth due to the virus – but this too shall pass,” said Mike Loewengart, vice president of investment strategy at E*Trade. “At the end of the day, reality checks are healthy, however scary. What makes these past few days an order of magnitude scarier is the nearly unprecedented severity of the drops, which supports the fact that while past can sometimes be prologue in the markets, each day will always present new challenges, o the best defense is to be well-diversified and focused on the long-term.

More than 83,000 people – mostly in China but in rising numbers around the world – have been infected by the virus, officially known as Covid-19, with new cases confirmed overnight in Nigeria, New Zealand and Lithuania.

“This virus has pandemic potential,” said World Health Organization Director General Tedros Adhanom Ghebreyesu. “This is not a time for fear. This is a time for taking action to prevent infection and save lives now.”

Foot Locker (FL) – Get Report posted stronger-than-expected fourth-quarter earnings but weak holiday demand and tough competition in sports clothing markets held back same-store sales growth.

Furniture retailer Wayfair (W) – Get Report reported fourth-quarter losses wider than analysts’ expectations.

Cisco Systems (CSCO) – Get Report has begun a new round of layoffs as the networking-equipment giant, like many tech companies, faces an uncertain global economy.

Cisco told The Wall Street Journal that the layoffs were “part of an ongoing process of aligning our investments and resources to meet the evolving needs of our customers and partners.” The company, which has around 75,000 employees, didn’t disclose how any jobs were cut or in what divisions the layoffs were made.