The market volatility is expected to continue as the coronavirus pandemic that triggered closures in economies worldwide remains very much a threat.
The United States surpassed two grim milestones on Thursday as virus-related deaths soared past 1,000 and it become the world leader in confirmed cases. Worldwide, confirmed cases rose above 551,000 with nearly 25,000 deaths.
The stimulus "is not necessarily enough to make people say, 'I've got to run out and buy stocks,'" said Rick Meckler, a partner at Cherry Lane Investments in New Jersey. "That's going to take more time."
The uncertainty over the overall human and economic toll was reflected in financial markets. MSCI's gauge of global stocks was on track to post both its largest weekly percentage gain since 2008 and its largest monthly and quarterly drops since 2008.
The infection rate for the coronavirus is driving much of the market at a time of great uncertainty, said Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York.
"My big hang-up here is when the curve does start to flatten, that doesn’t mean we can return to normal human and economic behavior," he said. "If we do return to normal human and economic behavior, we risk the chance the curve goes parabolic again. Just from the perspective of how long this potentially can last, there’s still a great deal of uncertainty."
The Dow Jones Industrial Average fell 602.06 points, or 2.67%, to 21,950.11, the S&P 500 lost 56.88 points, or 2.16%, to 2,573.19 and the Nasdaq Composite dropped 169.11 points, or 2.17%, to 7,628.43.
The pan-European STOXX 600 index lost 3.26%, and MSCI's gauge of stocks across the globe shed 1.56%. Emerging market stocks lost 0.90%.
Stock markets have rallied over the past week on trillions of dollars of enacted and pledged economic stimulus by policymakers worldwide, from central banks to governments. Policymakers may need to offer more stimulus as the virus slams the brakes on economic activity and increases healthcare spending.
"Next week, markets will likely continue to focus on the spread of COVID-19 - whether European cases are reaching a peak, how much of the U.S. will be put in lockdown, and whether China can avoid a second wave," said Gaétan Peroux, strategist at UBS Global Wealth Management.
The $2.2 trillion stimulus package passed by the U.S. Congress will flood the world's largest economy with money to stem the economic damage from the pandemic.
Amid the avalanche of stimulus, the U.S. dollar extended its daily decline and remained on track for its biggest weekly decline since early 2009. The dollar index fell 0.753% on Friday.
The euro was up 0.63% to $1.1098, the Japanese yen strengthened 1.59% versus the greenback at 107.90 per dollar, while sterling was last trading at $1.2432, up 1.89% on the day.
The U.S. currency's fall after two weeks of steep gains suggests the Federal Reserve's efforts to relieve a crunch in the dollar funding market are working, some analysts said.
"What we are seeing is abating stress in the money markets. Action by central banks has been successful so far and a shortage of dollars has been taken off the table," said Ulrich Leuchtmann, head of FX and EM research at Commerzbank.
U.S. Treasury yields were headed for a weekly decline, though the range of trading was far less volatile than in the previous two sessions.
Benchmark 10-year notes last rose 21/32 in price to yield 0.7424%, from 0.808% late on Thursday. The 30-year bond last rose 1-26/32 in price to yield 1.3291% from 1.395%.
Oil prices continued their fall on demand concerns as the virus slowed economies to a crawl, which outweighed the stimulus efforts. U.S. crude recently fell 4.07% to $21.68 per barrel and Brent was recently at $24.98, down 5.16% on the day.
Gold market participants remained concerned about a supply squeeze after a sharp divergence between prices in London and New York. The virus has grounded planes used to transport gold and closed precious metal refineries.
Spot gold dropped 0.8% to $1,615.92 an ounce. The metal was on track to post its largest weekly advance since 2008.
(Reporting by Rodrigo Campos; Additional reporting by Sujata Rao and Ritvik Carvalho in London, Karen Brettell, Herbert Lash and Kate Duguid in New York, and Uday Sampath Kumar and Medha Singh in Bengaluru; Editing by Dan Grebler and Leslie Adler) ((firstname.lastname@example.org; @rodrigocampos; +1.646.223.6344; Reuters Messaging: email@example.com))