Dow’s losses deepen as benchmark government bond carves out new record low

U.S. stocks lurched lower Thursday as anxieties about the world-wide spread of COVID-19 lingered and concerns about the ability of governments to control the impact of the disease on their economies sent the benchmark U.S. Treasury note yield to a fresh all-time low.

See:Why stocks tanked despite the Fed’s emergency rate cut

How are major benchmarks faring?

The Dow Jones Industrial Average
traded about 951 points, or 3.5%, lower, near 26,140, while the S&P 500
was down about 106 points, 3.4%, to trade near 3,024. The Nasdaq Composite
fell 264 points, 2.9%, to trade near 8,7754.

On Wednesday, the Dow advanced 1,173.45 points, or 4.5%, to settle at 27,090.86. The S&P 500 rose 126.75 points, or 4.2%, to end at 3,130.12. The Nasdaq Composite climbed 334 points, or 3.9%, to 9,018.09.

For the year to date, the Dow is now down 8.6%, the S&P 500 has lost about 6.6%, and the Nasdaq is about 2.6% lower.

What’s driving the market?

Markets are fixated on the economic implications of efforts to contain the spread of COVID-19, the infectious disease that reportedly originated in Wuhan, China in December, sickening at least 95,000 people since then.

Worldwide, there are now 95,748 cases of COVID-19 and at least 3,286 deaths, according to the latest figures from the Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering.

“Clearly some of this morning’s decline is just normal give back from yesterday’s explosive rally, although economic fears are continuing to mount as the number of canceled events, gatherings and conferences continues to rise,” wrote Tom Essaye, president of The Sevens Report, in a morning note.

The Dow has had two 4% or more gains in the last three days. The last time the index had two 4% gains or more in a three trading day span was when the index had back to back gains of over 4% in November 2008, according to Dow Jones Market Data.

“Coronavirus headlines will continue to drive trading, and broadly speaking any reports of U.S. or global economic stimulus will be a tailwind on stocks, while any reports of an acceleration of the spread will obviously be a headwind,” Essaye added.

See: World braces for months of trouble as virus pushes west

That news comes after U.S. lawmakers passed an $8 billion emergency spending package on Thursday to combat the coronavirus, and the International Monetary Fund announced a $50-billion lending programs to help businesses harmed world-wide by the epidemic.

In U.S. economic data, first-time applications for unemployment insurance declined in the most recent week, the Labor Department said Thursday morning. Productivity and unit labor costs in the fourth quarter were both lowered from an initial read. Factory orders declined 0.5% in January, the government said.

Which stocks are in focus?
    Burlington Stores Inc. shares jumped more than 2.3%Thursday after the discount retailer beat profit estimates for its fiscal fourth quarter but offered guidance for the first quarter that lagged behind estimates.

  • iBio Inc.
    shares surged on hopes for a partnership with a Chinese company to develop a coronavirus vaccine.

  • US:BJ
    BJ’s Wholesale Club Holdings Inc. reported Thursday fiscal fourth-quarter profit and revenue that matched expectations, while same-store sales came up a bit shy.Shares jumped more than 5%.

  • US:UAL
    Airline stocks sold off hard Thursday morning after a string of revenue warnings and the collapse of a U.K. air carrier. United Airlines Holdings Inc. slid about 10%, American Airlines Group, Inc. shares were down nearly 12%, and Southwest Airlines Co. shares fell about 4.5%.

  • US:HTZ
    Car-rental companies were even harder hit after an analyst warning on travel disruptions. Hertz Global Holdings Inc.  shares lost more than 14% and Avis Budget Group Inc.  saw shares fall about 13%.

  • US:ZM
    Zoom Video Communications Inc. shares jumped nearly 8% Thursday as analysts cheered rosy fourth-quarter earnings and forecast increased demand for the company’s services, which enable remote working.

  • Dollar Tree Inc.
    shares rose after a Deutsche Bank upgrade.

How are other assets performing?

The benchmark U.S. 10-year Treasury note
ticked down about 7 basis points to yield 0.92%. Bond yields rise as prices fall. The 10-year briefly breached 0.90%, a new low, midday, spooking stock investors.

Gold for April delivery
gained 1.7% to trade at $1,670 an ounce on renewed demand for assets perceived as havens, while
April crude futures traded 1.3% lower to $46.216 a barrel on the New York Mercantile Exchange

The Cboe Volatility Index
roared to 40, up 25%. The so-called VIX rises as stocks fall and is used as a gauge of implied volatility in the stock market. Its historic average is around 19.

The dollar
was 0.5% lower compared with a basket of currency trading partners.

In Europe, stocks were mixed. The FTSE
jumped 1.5%, but the Stoxx Europe
fell 1.4%.

In Asia overnight, the Shanghai Composite Index
gained 2% and Tokyo’s Nikkei 225
rose 1.1%. The Kospi
in Seoul gained 1.3%. China’s CSI 300 Index
rallied 2.2%.

Related: Buy the dip? Here’s how some analysts say investors should play it

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