U.S. stocks showed signs of fatigue following the fastest rally in nine decades, even after Congress passed a US$2 trillion stimulus package meant to blunt the economic impact of the coronavirus. Treasuries gained and oil plunged.

The S&P 500 Index declined as much as 4 per cent Friday, giving back a portion of its 18 per cent surge over the previous three days. The equity benchmark is still headed for its best week in 11 years, though it remains 25 per cent off its February record. The Cboe Volatility Index, the so-called fear gauge, is on track for a 10th straight close above 60. It averaged 18.7 in the past year.

Investors had piled back into the battered U.S. equity market this week on speculation that the unprecedented US$2 trillion relief package would offset the pandemic’s economic damage. A debate has ensued over whether that furious rally represented unwarranted optimism or the start of a long-term upswing.

What remains clear is that the virus has ground the American economy to a near total halt, with new jobless claims spiking above 3 million as large areas of the country remain virtually locked down to slow the spread of the infection. A measure of U.S. consumer confidence fell the most since 2008.

“We don’t think we’re necessarily out of the woods yet,” James Ragan, director of wealth management research at D.A. Davidson, said by phone. “There’s still quite a bit of headline risk. And it’s more than just headlines -- coronavirus is not contained in the U.S., we’re still seeing a lot of negative numbers on that front. And, of course, the economic data is barely just starting to filter through.”

Stocks are still up about 10 per cent for the week, largely pinned on stimulus hopes. The 10-year Treasury yield fell below 0.75 per cent. West Texas crude declined, setting up a fifth straight week of losses. The dollar was having its worst week since 2009.

The Stoxx Europe 600 Index was led lower by banks and real estate shares after the region’s leaders struggled to agree on a concrete strategy to contain the fallout of the pandemic. Asian equities mostly rose, though shares in Australia slumped. The pound gained even as U.K. Prime Minister Boris Johnson said he had tested positive for coronavirus.

The recent revival of risk appetite looks sure to be tested by the continuing spread of the infection and the crippling effect of business closures. Tokyo is now seeing a surge in cases, while global deaths from the pandemic surpassed 24,000. The Reserve Bank of India on Friday became the latest central bank to step up emergency action to cushion the economic impact.

“It is by no means a given that volatility has ceased to be a feature of global equity markets,” said Paul Markham, global equities portfolio manager at Newton Investment Management. “Markets will oscillate between the reassurance that governments and central banks will be standing by to support them and the uncertainty of both the duration and depth of what will undoubtedly be a significant economic impact.”

These are the main moves in markets:


  • The S&P 500 Index decreased 2.2 per cent as of 2:48 p.m. New York time.
  • The Stoxx Europe 600 Index dropped 3.3 per cent.
  • The MSCI Asia Pacific Index rose 1.9 per cent.


  • The Bloomberg Dollar Spot Index fell 0.6 per cent.
  • The euro gained 0.6 per cent to US$1.1101.
  • The British pound increased 1.9 per cent to US$1.2439.
  • The Japanese yen gained 1.6 per cent to 107.86 per dollar.


  • The yield on 10-year Treasuries declined 11 basis points to 0.74 per cent.
  • Germany’s 10-year yield dipped 11 basis points to -0.474 per cent.
  • Britain’s 10-year yield fell three basis points to 0.367 per cent.


  • Gold decreased 0.6 per cent to US$1,622.02 an ounce.
  • West Texas Intermediate crude decreased 4.1 per cent to US$21.67 a barrel.

--With assistance from Yakob Peterseil and Adam Haigh.