Dow Loses 12% for Week on Coronavirus Panic; Fed Says It Will Act 'Appropriately'

Stocks finish their worst week since the global financial crisis amid fears of a global coronavirus pandemic.
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  1. The Dow finished down more than 300 points Friday, capping off the worst week for world stocks since the 2008 financial crisis.
  2. Coronavirus update: 2,788 deaths in China and 78,824 confirmed cases. Globally, there are 2,867 deaths and 83,867 confirmed cases.
  3. Clorox is Real Money's Stock of the Day. The disinfectant maker has stepped up production on demand for its hand sanitizers and disinfectants amid the virus outbreak.

Stocks capped off their worst week since the 2008 financial crisis with more declines Friday as investors braced for a potential coronavirus pandemic.

The Dow Jones Industrial Average ended down 355 points, or 1.38%, to 25,409, the S&P 500 declined 0.83%, while the Nasdaq was essentially flat, finishing up 0.01%. At one point Friday, the blue-chip Dow had fallen more than 1,000 points.

For the week, the Dow lost 12.4%, the S&P fell 11.5% and the Nasdaq declined 10.5%.

Leading the Dow lower Friday were JPMorgan Chase  (JPM) - Get Report, Boeing (BA) - Get Report and McDonald's (MCD) - Get Report.

With Moody's Investors Service warning of the potential for a coronavirus-led global recession, supply chains disrupted by China's ongoing health crisis and the lingering effects of its trade war with the United States, and government bond yields around the world testing all-time lows, risk appetite was in short supply Friday. Gold prices, a safe-have asset, were on track for their third straight monthly gain.

“The markets are terrified that the disruption is going to hit GDP and then will hit profits at some stage,” Andrew Freris, CEO of Ecognosis Advisory Co. in London, told Bloomberg. “The only thing central banks can do is cut interest rates, and cutting interest rates isn’t going to do anything to restore the supply disruption in individual
countries.”

Federal Reserve Chairman Jerome Powell said the central bank was "closely monitoring" developments and said it would act when appropriate. Powell noted the coronavirus poses "evolving risks" but that the U.S. economy remained strong.

Yields on 10-year and 30-year U.S. Treasuries hit record lows again Friday.

"Fundamentals are being pushed to the wayside as the market moves beyond hype and is beginning to price in a tangible deceleration in growth due to the virus - but this too shall pass," said Mike Loewengart, vice president of investment strategy at E*Trade. "At the end of the day, reality checks are healthy, however scary. What makes these past few days an order of magnitude scarier is the nearly unprecedented severity of the drops, which supports the fact that while past can sometimes be prologue in the markets, each day will always present new challenges, o the best defense is to be well-diversified and focused on the long-term. 

More than 83,000 people - mostly in China but in rising numbers around the world - have been infected by the virus, officially known as Covid-19, with new cases confirmed overnight in Nigeria, New Zealand and Lithuania.

"This virus has pandemic potential," said World Health Organization Director General Tedros Adhanom Ghebreyesu. "This is not a time for fear. This is a time for taking action to prevent infection and save lives now."

Foot Locker  (FL) - Get Report posted stronger-than-expected fourth-quarter earnings but weak holiday demand and tough competition in sports clothing markets held back same-store sales growth.

Furniture retailer Wayfair  (W) - Get Report reported fourth-quarter losses wider than analysts' expectations.

Cisco Systems  (CSCO) - Get Report has begun a new round of layoffs as the networking-equipment giant, like many tech companies, faces an uncertain global economy.

Cisco told The Wall Street Journal that the layoffs were “part of an ongoing process of aligning our investments and resources to meet the evolving needs of our customers and partners.” The company, which has around 75,000 employees, didn't disclose how any jobs were cut or in what divisions the layoffs were made.

Cisco is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CSCO? Learn more now.

Beyond Meat  (BYND) - Get Report was tumbling Friday after the plant-based meat maker beat analysts' fourth-quarter revenue estimates but its loss in the period came in below expectations.

Beyond Meat posted a loss of 1 cent a share on revenue of $98.5 million. Analysts were expecting Beyond Meat to report a profit of 1 cent a share on revenue of $79.5 million.