Wall Street stocks tumbled on Friday, ending a massive three-day surge after doubts about the fate of the U.S. economy resurfaced and the number of coronavirus cases in the country climbed.
U.S. stocks deepened their losses late in the session, even after the House of Representatives approved a $2.2 trillion aid package - the largest in American history - to help people and companies cope with an economic downturn caused by the coronavirus outbreak and provide hospitals with urgently needed medical supplies.
The United States has surpassed China and Italy as the country with the most coronavirus cases. The number of U.S. cases passed 100,000, and the death toll exceeded 1,500.
"We have still not fully understood the degree of the economic impact," warned Massud Ghaussy, senior analyst at Nasdaq IR Intelligence in New York.
"Currently, from a policymaker's perspective, it's a relative balance between managing the spread of the virus and opening the economy."
After the market closed, President Donald Trump signed the stimulus package into law.
The bill, along with unprecedented policy easing by the Federal Reserve, helped the S&P 500 surge 10.2% for the week, its best week since 2009. But the U.S. stock market benchmark is still down about 25% from its February high.
In its strongest three-day performance since 1931, the Dow surged 21% in three straight days through Thursday, establishing it in a bull market, according to one widely used definition. Even after Friday's drop, the Dow ended 12.8% higher, its best week since 1938.
Many investors see a strong risk the market could fall deeply again as coronavirus infections increase and more people die, however.
"Next week will depend on what happens over the weekend," said Lindsey Bell, chief investment strategist at Ally Invest. "If there is a major acceleration over the weekend of coronavirus cases in New York and other states and the hospital system continues to get jammed up, then I think it will be a rough week for the market."
Macroeconomic indicators offered a glimpse of the economic devastation from the crisis as the lockdown of major cities upends the lives of millions of Americans.
U.S. consumer sentiment dropped to a near 3-1/2-year low in March, according to a survey released on Friday, a day after data showed a record 3 million surge in jobless claims last week.
The Dow Jones Industrial Average fell 915.39 points, or 4.06%, to 21,636.78, the S&P 500 lost 88.60 points, or 3.37%, to 2,541.47 and the Nasdaq Composite dropped 295.16 points, or 3.79%, to 7,502.38.
Volume on U.S. exchanges was 13.4 billion shares, its lowest since March 5, according to Refinitiv data.
Delta Airlines, American Airlines and United Airlines fell between 6% and 11% as U.S. Treasury Secretary Steve Mnuchin said the help designated for airlines in the aid package was not a bailout and that taxpayers would need to be compensated.
Boeing Co slumped 10%, but was still up more than 70% for the week, after Mnuchin said the planemaker had no intention of using federal money.
The banking index fell 4.6%, tracking U.S. Treasury yields as investors sought safety in high-quality assets.
The energy index was the biggest percentage loser among the 11 major S&P sectors, sliding 6.9%, following a drop in oil prices.
Declining issues outnumbered advancing ones on the NYSE by a 3.17-to-1 ratio; on Nasdaq, a 2.98-to-1 ratio favored decliners.
The S&P 500 posted one new 52-week high and one new low; the Nasdaq Composite recorded nine new highs and 39 new lows.
GLOBAL MARKETS
Stocks across the globe fell after a historic three-day run-up, as skittish investors kept indices on track for their worst monthly and quarterly performances since 2008, while the dollar fell by the most in any week since 2009.
The dollar's slump was seen partly as a sign that central bankers have been successful in easing stress in the money markets.
Market volatility is expected to persist as the coronavirus pandemic that triggered closures in economies worldwide remains very much a threat.
The United States surpassed two grim milestones as virus-related deaths soared past 1,200 and it became the world leader in confirmed cases. Worldwide, confirmed cases rose above 551,000 with nearly 25,000 deaths.
The stimulus "is not necessarily enough to make people say, 'I've got to run out and buy stocks,'" said Rick Meckler, a partner at Cherry Lane Investments in New Jersey. "That's going to take more time."
Uncertainty over the overall human and economic toll was reflected in financial markets. MSCI's gauge of global stocks rallied by the most in any week since December 2008, but is also poised for its largest month- and quarter- drops since 2008, during the height of the financial crisis.
Nervous investors supported demand for gold, whose prices jumped by the most in any week since 2008 despite a Friday decline.
The coronavirus infection rate is driving much of the market at a time of great uncertainty, said Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York.
"My big hang-up here is when the curve does start to flatten, that doesn't mean we can return to normal human and economic behavior," he said.
"If we do return to normal human and economic behavior, we risk the chance the curve goes parabolic again. Just from the perspective of how long this potentially can last, there's still a great deal of uncertainty."
The pan-European STOXX 600 index lost 3.26%, and MSCI's gauge of stocks across the globe shed 2.39%. Emerging market stocks lost 1.03%.
Stock markets have rallied over the past week on trillions of dollars of economic stimulus enacted or pledged by policymakers worldwide, from central banks to governments. More may be needed as the virus slams the brakes on economic activity and increases healthcare spending.
"Next week, markets will likely continue to focus on the spread of COVID-19 - whether European cases are reaching a peak, how much of the U.S. will be put in lockdown, and whether China can avoid a second wave," said Gaétan Peroux, strategist at UBS Global Wealth Management.
The $2.2 trillion stimulus package signed by Trump will flood the world's largest economy with money to stem the economic damage from the pandemic.
Amid the avalanche of stimulus, the U.S. dollar extended its daily decline and posted its biggest weekly decline since early 2009. The dollar index fell 0.937% on Friday.
The euro was up 0.97% to $1.1135, the Japanese yen strengthened 1.49% versus the greenback at 108.00 per dollar, while sterling was last trading at $1.2447, up 2.02% on the day.
The U.S. currency's fall after two weeks of steep gains suggests the Federal Reserve's efforts to relieve a crunch in the dollar-funding market are working, some analysts said.
"What we are seeing is abating stress in the money markets. Action by central banks has been successful so far and a shortage of dollars has been taken off the table," said Ulrich Leuchtmann, head of FX and EM research at Commerzbank.
U.S. Treasury yields posted a weekly decline, ending Friday near the day's lows.
Benchmark 10-year notes last rose 1-9/32 in price to yield 0.6778%, from 0.808% late on Thursday. The 30-year bond last rose 3-24/32 in price to yield 1.2555%, from 1.395%.
Oil prices extended their fall on demand concerns as the virus slowed economies to a crawl, which outweighed the stimulus efforts. U.S. crude recently fell 3.98% to $21.70 per barrel and Brent was recently at $24.83, down 5.73% on the day.
Gold market participants remained concerned about a supply squeeze after a sharp divergence between prices in London and New York. The virus has grounded planes used to transport gold and closed precious metal refineries.
Spot gold dropped 1.0% to $1,613.02 an ounce. The metal posted its largest weekly advance since 2008.
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