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S&P 500 Sinks to Three-Year Low; Oil Tumbles: Markets Wrap

Claire Ballentine and Vildana Hajric

(Bloomberg) -- U.S. stocks dropped to cap the worst week for equities since the global financial crisis amid dire warnings about the economic effects of the coronavirus pandemic and as governments stepped up efforts to keep people at home.

The S&P 500 Index tumbled to its lowest in three years, ending the week down 15% as the European Union said the recession this year may be as bad as 2009, and Goldman Sachs warned the U.S. economy may shrink 24% on an annualized basis in the second quarter. Oil sank as governments around the world imposed restrictions on movement to slow the disease’s spread, bringing its weekly decline to 29%.

The 10-year Treasury yield fell back below 1%. The dollar was little changed after vaulting more than 8% in the previous eight sessions as the Federal Reserve coordinated action with global central banks to beef up dollar liquidity swap line arrangements. Gold edged higher.

“This is not a market that is going to all of a sudden heal itself,” Marvin Loh, senior global macro strategist at State Street Global Markets, said by phone.

Investors are weighing a faster pace of coronavirus infections against flickers of optimism that have followed extraordinary government actions to protect the global economy, from plans for stimulus and cash handouts to nationalizing companies. Hedge funds, stock exchanges, banks and even brick-and-mortar businesses in the U.S. are lobbying Washington policy makers not to shut markets.

Still, the World Health Organization said that the pace of infections is speeding up. Cases doubled to 200,000 in the 12 days through Thursday, but just one day later the tally already was almost halfway to 300,000.

U.S. stock trading volumes surged to about 60% above the average in the midst of a phenomenon known as quadruple witching caused by expiring options and futures contracts.

In the latest virus developments,

Global deaths top more than 10,000, according to Johns Hopkins University; Italy reported 627 deaths, the most in one dayGovernor Andrew Cuomo ordered New Yorkers to stay at home for the foreseeable future following a similar move by CaliforniaThe European Central Bank provided capital relief measures to banksAir France-KLM and Airbus SE are poised to tap French government-backed loansSwitzerland announced a 32 billion franc ($32.6 billion) economic support packageThe German government wants to set up a rescue fund for companies hit by coronavirus worth about 500 billion euros.

These are the main moves in markets:

Stocks

The S&P 500 Index fell 4.4% at 4 p.m. New York time; the Nasdaq Composite slid 3.8%.The Stoxx Europe 600 Index rose 1.8%.The MSCI Asia Pacific Index surged 2.5%.

Currencies

The Bloomberg Dollar Spot Index rose 0.1%.The euro weakened 0.3% to $1.0665.The British pound climbed 0.8% to $1.1574.The Japanese yen slipped 0.5% to 111.23 per dollar.

Bonds

The yield on 10-year Treasuries dropped 23 basis points to 0.91%.Germany’s 10-year yield fell 13 basis points to -0.33%.Britain’s 10-year yield decreased 16 basis points to 0.55%.

Commodities

Gold gained 0.9% to $1,484.98 an ounce.West Texas Intermediate crude fell 11% to $22.43 a barrel.

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