U.S. stocks tumble after a tumultuous week.
Wall Street had its worst week since 2008 as the threat of an impending recession appeared ever more likely in the face of the spreading coronavirus.
The Dow Jones industrial average closed down more than 4.5 percent on Friday, ending below where it stood on the day before President Trump was inaugurated, erasing the so-called “Trump bump” that the president has trumpeted throughout his presidency as evidence of his success. The S&P 500 isn’t far from that mark as well.
Stocks have collapsed more than 30 percent in a month, wiping out trillions in value and ending an 11-year long bull market. For both the S&P 500 and the Dow, the drop this week was the worst since the financial crisis more than a decade ago.
Policymakers are working feverishly to offset the economic impact from the virus pandemic, but their promises have so far failed to fully soothe investors. The persistent volley of bad news continued this week as the number of confirmed coronavirus infections in the United States climbed. California has imposed a “shelter in place” restriction on the state, New York’s governor told residents to stay indoors and ordered nonessential businesses to keep workers home, and a wave of jobless claims is only just beginning to swell.
Congress is preparing a $1 trillion stimulus package to help workers and prop up the American economy, and central bankers in the United States and Europe have used their financial firepower to bolster the markets.
On Friday, traders clearly focused on the negative. The S&P 500 fell about 4 percent, after rising earlier in the day, as the mood grew increasingly dour.
It was another sharp turn in a market that has come to be characterized by dizzying changes in direction over the past month as investors have grappled with the barrage of developments. On Friday, the United States said it would shutdown its borders with Mexico and Canada, both of which are critical trading partners.
Analysts at the hedge fund Bridgewater on Thursday estimated that corporate revenue in the United States — among public and private companies — could fall by $4 trillion. “That is a very dangerous decline, and, if not mitigated, it will lead to a long-lasting ripple,” they wrote on Bridgewater’s website.
E.U. tells countries to spend ‘as much as they need.’
The European Commission on Friday triggered the so-called “general escape clause,” a panic button that lifts stringent spending rules and allows countries to run big deficits to respond to a crisis, turning to an emergency economic measure that would have been unimaginable just weeks ago.
The clause means Europe is abandoning its expectations that countries keep their deficits and debt loads small, and it’s the first time in the European Union’s history that it has turned to this measure.
“Today — and this is new and never done before — we trigger the general escape clause,” Ursula von der Leyen, the president of the European Commission, said in a video posted on her Twitter account.