The Dow(INDU) is set to open 800 points lower. S&P 500(SPX) futures were down 3.1% and Nasdaq(COMP) futures dropped 3.4%. Thursday’s trading session was just as brutal.
Safe havens: As stocks tumbled, CNN Business’ Fear and Greed Index remained in “extreme fear” territory. The VIX volatility index soared another 17% to its highest level since August 8, 2011, a day of panic selling when the US credit rating was downgraded.
Investors poured money into safe-haven assets: US Treasury bond buying skyrocketed, and the 10-year yield fell below 0.7%to a new record low. Gold is up more than 1% and pushing $1,700 an ounce. The Japanese yen strengthened once again, gaining nearly 1% against the dollar Friday.
Jobs: Investors are anxiously awaiting the US jobs report, which Labor Department will release at 8:30 am ET. Coronavirus fears hadn’t yet fully taken hold when the jobs survey was completed in mid-February, so economists expect a reasonably large number of jobs were added to the US economy last month. But March’s report could be ugly, and if February’s jobs report shows any sign of underlying weakness, stocks could head even lower.
Oil: US oil is down 3.7% Friday to just over $44 a barrel on reports that Russia will not sign up to OPEC’s new plan to slash crude output. The oil cartel on Thursday said it would reduce output by 1 million barrels per day — on top of existing cuts — and it asked non-cartel allies, including Russia, to cut a total of 500,000 barrels per day.
Russia and OPEC are meeting Friday, but Moscow disagrees with the cartel’s proposal, according to the Wall Street Journal. That uncertainty sent oil sharply lower. Oil is in a deep bear market and demand has plummeted during the coronavirus outbreak. Fewer people are traveling, reducing fuel usage.
The push and pull has sent investors into a tizzy. Coronavirus has upended some of the world’s largest economies, and no one knows how long the downturn will last. Some central banks, including the US Federal Reserve, have responded with economic stimulus, but the Fed’s surprisingly large emergency rate cut this week unnerved investors.
They worry that nomonetary policy action can make coronavirus-averse consumers want to travel or go out to concerts or malls. The Fed can’t force sick workers back to factories or offices.
“Does coronavirus negatively impact the supply chain, cause massive demand uncertainty in the near-term around consumers/enterprises, and ultimately add a major risk profile to valuations?” asked Dan Ives, analyst at Wedbush Securities, in a note to investors Friday morning. “The answer is a clear YES.”
As Friday morning proves, stocks may have plenty of ground left to give up before coronavirus fears subside.
