U.S. stocks displayed a ‘whip-saw’ session on Thursday, first plummeting to seven-day lows, before paring those losses off amid renewed concerns regarding the coronavirus’ potential economic impact.
Some traders pointed to a report from the Chinese state-run Global Times, which said there had been a sharp increase in coronavirus cases at a hospital in Beijing. While the timing of the story did not match with Thursday’s move lower, however, it does reflect on how sensitive the markets fears about the coronavirus weighing on the global economy.
China’s National Health Commission on Wednesday reported 394 new confirmed cases, significantly lower than the 1,749 infections announced nationwide the previous day.
A total of 74,576 cases of the new coronavirus have now been confirmed; with 114 new deaths from the coronavirus, reported on Thursday, bringing the death toll to 2,118 in China.
Coronavirus cases are also spiking in South Korea. The country said confirmed cases have jumped to 82, more than double the previous number of cases.
The Dow Jones Industrial Average closed -128.05 points lower, or -0.44%, at 29,219.98.
The 30-stock average went from trading down about -200 points to a session low of down -388 points in roughly two minutes before rebounding.
The S&P 500 slid -12.92 points or -0.38% to 3,373.23 and the tech-heavy Nasdaq Composite fell -66.22 points or -0.67% to 9,750.96.
Thursday’s moves come a day after the S&P 500 and Nasdaq hit record highs.
Traditional safe havens such as bonds and gold got a boost on Thursday. The benchmark 10-year note yield fell to 1.52%, around its session low. Yields move inversely to prices.
The precious yellow metal prices surged to a fresh seven-year high, at $1,623.00 per ounce.
S&P Global Ratings warned in a report on Thursday that Chinese lenders could be hit by as much as $1.1 trillion in questionable loans as the coronavirus ripples through China’s economy.
Earlier in the day, a high-ranking Federal Reserve official also poured cold water on market expectations for easier monetary policy from the U.S. central bank.
“Market pricing on rate cuts is a little tricky,” Fed Vice Chairman Richard Clarida said, noting that he prefers to look at economists’ forecasts over futures markets on Fed rates. Clarida noted many economists do not expect a rate cut soon from the Fed.
“I don’t think when you ask folks, they’re pricing in that rate cut, even though market pricing might suggest that,” he added.
Broader forecasts have been pricing in at least one rate cut from the Fed for this year.
Expectations for lower rates come as investors grapple with the outbreak of the deadly coronavirus and its ramifications for the global economy.