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Wall Street has worst week since 2008 as S&P 500 drops 11.5%

Stocks sank around the globe again Friday as investors braced for more economic pain from the coronavirus outbreak, sending U.S. markets to their worst weekly finish since the 2008 financial crisis.

The damage from the week of relentless selling was eye-popping: The Dow Jones Industrial Average fell 3,583 points, or 12.4%. Microsoft and Apple, the two most valuable companies in the S&P 500, lost a combined $300 billion. In a sign of the severity of the concern about the possible economic blow, the price of oil sank 16%.

The market's losses moderated Friday after the Federal Reserve released a statement saying it stood ready to help the economy if needed. Investors increasingly expect the Fed to cut rates at its next policy meeting in mid-March.

The Dow swung back from an early slide of more than 1,000 points to close around 350 points lower. The S&P 500 fell 0.8% and is now down 13% since hitting a record high just 10 days ago. The Nasdaq reversed an early decline to finish flat.

Global financial markets have been rattled by the virus outbreak that has been shutting down industrial centres , emptying shops and severely crimping travel all over the world. More companies are warning investors that their finances will take a hit because of disruptions to supply chains and sales. Governments are taking increasingly drastic measures as they scramble to contain the virus.

The rout has knocked every major index into what market watchers call a “correction,” or a fall of 10% or more from a peak. The last time that occurred was in late 2018, as a tariff war with China was escalating. Market watchers have said for months that stocks were overpriced and long overdue for another pullback.

Bond prices soared again as investors sought safety and became more pessimistic about the economy's prospects. That pushed yields to more record lows. The yield on the 10-year Treasury note fell sharply, to 1.14% from 1.30% late Thursday. That's a record low, according to TradeWeb. That yield is a benchmark for home mortgages and many other kinds of loans.

Crude oil prices sank 4.9% over worries that global travel and shipping will be severely crimped and hurt demand for energy.

“All this says to us is that there are still a lot of worries in the market,” said Gene Goldman, chief investment officer at Cetera Financial Group. “We need the Fed to come out and say basically guys, we got your back.”

Traders have been growing more certain that the Federal Reserve will be forced to cut interest rates to protect the economy, and soon. Goldman said the Fed’s current lack of action amounts to a tightening of rates compared with other nations and their actions to offset the impact of the coronavirus.

Investors now widely expect the Fed to cut interest rates by a half-point at its meeting that winds up March 18. According to data from the Chicago Mercantile Exchange's Fedwatch tool, the expectations for a half-point cut jumped from 47% just before the Fed's statement was released to 60% by the close of trading.

The latest losses have wiped out the S&P 500's gains going back to October. The benchmark index is still up 6.1% over the past 12 months, not including dividends. Its weekly loss of 11.5% was the biggest since an 18.2% drop in the week ending October 10, 2008.

The sell-off follows months of uncertainty about the spread of the virus, which hit China in December and shut down large swaths of that nation by January. China is still the hardest hit country and has most of the 83,000 cases worldwide and related deaths.

Uncertainty turned into fear as the virus started jumping to places outside of the epicenter and dashed hopes for containment.

"Fear is a stronger emotion than hope," said Ann Miletti, head of active equity at Wells Fargo Asset Management. “This is what we’re seeing today and this week and over the past seven days.”

Airlines have suffered some of the worst hits as flight routes are cancelled, along with travel plans. Big names like Apple and Budweiser brewer AB InBev are part of a growing list of companies expecting financial pain from the virus. Dell and athletic-wear company Columbia Sportswear are the latest companies expecting an impact to their bottom lines.

Cruise operators have also been hard hit, with shares sinking 30% or more as shipboard infections rose. But those companies were having a far better day Friday, with some on Wall Street believing that the sell-off was overdone. Shares of Royal Caribbean Cruises rose 4.4%, while Norwegian Cruise Line Holdings gained 7.3%. Carnival's shares climbed 5.1%.

A big concern investors have is that the stock market rout could have a psychological effect on consumers, making them reluctant to spend money and go to crowded places like stores, restaurants and movie theatres .

The late-2018 stock market plunge, for instance, derailed holiday sales that year. Now, analysts are worried that the latest stock swoon could cause consumer spending — which makes up some 70% of the economy and has played a huge role in keeping the U.S. expansion going — to contract again.

Craig Johnson, president of Customer Growth Partners, a consumer consultancy, says he had expected annual retail sales to be up 4.1%, but he now says it could increase just 2.2% if the impact of the new virus in China persists beyond April.

‘’This is a moving target right now,”’ he said. ‘’There is a lot of uncertainty.’’

Many companies face the prospect of crimped financial results with their stocks already trading at high levels relative to their earnings. Before the virus worries exploded, investors had been pushing stocks higher on expectations that strong profit growth was set to resume for companies after declining for most of 2019.

MARKET ROUNDUP:

The Dow fell 357.28 points, or 1.4%, to 25,409.36. The S&P 500 slid 24.54 points, or 0.8%, to 2,954.22. The Nasdaq rose 0.89 points, or less than 0.1%, to 8,567.37. The Russell 2000 index of smaller company stocks lost 21.44 points, or 1.4%, to 1,476.43.

In commodities trading, benchmark crude oil fell $2.33 to settle at $44.76 a barrel. Brent crude oil, the international standard, dropped $1.66 to close at $50.52 a barrel. Wholesale gasoline fell 2 cents to $1.39 per gallon. Heating oil was unchanged at $1.49 per gallon. Natural gas fell 7 cents to $1.68 per 1,000 cubic feet.

Gold fell $75.90 to $1,564.10 per ounce, silver fell $1.27 cents to $16.39 per ounce and copper fell 2 cents to $2.55 per pound.

The dollar fell to 108.42 Japanese yen from 109.95 yen on Thursday. The euro weakened to $1.0967 from $1.0987.

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AP Retail Writer Anne D'Innocenzio and AP Business Writer Stan Choe contributed.

Alex Veiga And Damian J. Troise, The Associated Press