US stocks plunge as traders fear coronavirus will cause deep recession

By Alex Veiga, Associated Press

US stocks have suffered their worst week since the financial crisis of 2008 as traders fear the coronavirus pandemic will plunge the US and other major economies into deep recessions.

The Dow dropped more than 900 points, extending its weekly loss to 17%.

The price of US crude oil also took another nosedive as investors anticipate a sharp drop in demand for energy as manufacturing, travel and commerce grind nearly to a halt.

New York became the latest state to extend an order to nearly all workers stay at home to limit the spread of the virus.

Investors have been weighing the likelihood that the global economy is entering a recession because of the massive shutdowns and layoffs caused by the outbreak against steps by central banks and governments to ease the economic pain.

Ultimately, investors say they need to see the number of new infections stop accelerating for the skid to ease.

The losses for the US indexes followed solid gains across markets in Europe, while markets in Asia closed higher.

On Thursday, the European Central Bank launched a programme to inject money into credit markets by purchasing up to 750 billion euros in bonds.

The Bank of England cut its key interest rate to a record low of 0.1% and restarted its own programme of money injections into the financial system.

Australia’s central bank cut its benchmark lending rate to 0.25%, and central banks in Taiwan, Indonesia and the Philippines also cut rates.

They are trying to reduce the impact of a global recession that forecasters say looks increasingly likely as the US and other governments tighten travel controls, close businesses and tell consumers and travellers to stay home.

The US Federal Reserve unveiled measures on Thursday to support money market funds and the borrowing of dollars as investors in markets worldwide hurry to build up cash as insurance against falling asset prices.