Stocks Whipsaw Traders on Virus Angst; Yields Dive; Markets Wrap

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(Bloomberg) — Global stocks tumbled to four-month lows, government debt yields sunk to unprecedented levels and extended declines as anxiety over the spread of the coronavirus surged.

The S&P 500 and indexes tumbled this week by more than 10% from all-time highs set this month, a so-called correction. The drop put the S&P on pace for its worst week since the 2008 global financial crisis. Volatility spiked, sending the Cboe’s measure of equity gyrations surging by the most since 2018. The MSCI All-Country World Index fell to the lowest since October, while the also entered a correction.

“Stocks and bonds say we’re doomed,” said Chris Rupkey, chief financial economist for MUFG Union Bank. “Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down.”

The outbreak has the potential to become a pandemic and is at a decisive stage, the head of the World Health Organization said Thursday. Goldman Sachs (NYSE:) slashed its outlook for U.S. companies’ profit growth to zero. Germany is examining potential stimulus measures to stem the economic impact. Saudi Arabia halted religious visits that draw millions.

Haven assets continued to be in demand, and the yen strengthened as yields on 10-year U.S. and Australian government bonds hit fresh record lows. Oil sank further. The pound reversed a gain after the U.K. told the European Union it could walk away from the negotiating table in June if progress isn’t being made toward a trade deal.

Investors are pricing in a Federal Reserve easing in April followed by another full rate cut in July, swaps data show, while bets for easing from Japan to Australia have also increased after the International Monetary Fund cut global growth forecasts.

Losses continue to mount as investors weigh each gloomy headline on the virus. U.S. health authorities on Wednesday said they found the first case of the illness that does not have ties to a known outbreak. Microsoft Corp (NASDAQ:). joined an expanding list of companies warning over the impact of the virus on operations.

“The way the market is going down, it’s happening pretty quickly, but it’s very difficult to say that it’s over,” said Sameer Samana, senior global market strategist for Wells Fargo (NYSE:) Investment Institute. “Bottoming is a multistep process and you’re probably still in step one.”

Here are some key events still to come this week:

  • Earnings keep rolling in from companies including: Baidu Inc (NASDAQ:)., Occidental Petroleum Corp (NYSE:). and Dell Technologies Inc. on Thursday after the close of U.S. trading, and London Stock Exchange Group (LON:) Plc on Friday.
  • Japan industrial production, jobs, and retail sales figures are due on Friday.

These are the main market moves:

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