By Karen Langley, Caitlin Ostroff and Chong Koh Ping 

The February market rout deepened Thursday, as major stock indexes around the globe posted another round of significant declines and uncertainty over the impact of the coronavirus began shading into fear.

The Dow industrials tumbled 1,190.95 points, or 4.4%, to 25766.64, bringing its slide this week to more than 3,200 points. The S&P declined 4.4%, extending its six-day decline to more than 10% -- the fastest slide of that magnitude off a recent all-time high on record.

The S&P 500 and the Nasdaq Composite notched their largest one-day percentage declines since August 2011. All three major U.S. indexes posted their biggest one-day point drops ever.

Selling was broad-based, with some energy and technology companies showing especially large declines. Shares that until last week were market highfliers posted double-digit losses, with Tesla sliding 13% and Virgin Galactic shedding 24%. Traders described an atmosphere of apprehension, with many fixating on headlines about the coronavirus epidemic, bracing for a drop in business activity and trying to get a grip on expectations for corporate earnings.

"Obviously it's a bloodbath," said David Bahnsen, chief investment officer of The Bahnsen Group, a wealth management firm. "When you get into a free-fall mode, there's really little that can be done but wait for some sort of footing to be found."

Oil prices dropped more than 2%, with Brent crude settling at its lowest level since December 2018. The technology sector, which until recently was leading the S&P 500's gains, lost 5.3% Thursday and is down 12% so far this week. Even utilities and consumer staples shares -- which investors typically flock to during volatility because of their generous dividend payments -- were hit by the selling. All 11 sectors of the S&P 500 are now in negative territory for the year. Investors sought the relative safety of government bonds, sending the yield on the benchmark 10-year Treasury note to new record lows.

The S&P 500 fell 137.63 points, or 4.4%, to finish 12% below its record close hit on Feb. 19. Its six-session skid since the record marked the fastest-ever descent into a correction from an all-time high, according to Dow Jones Market Data. The technology-heavy Nasdaq Composite dropped 414.29 points, or 4.6%, to 8566.48.

The list of fastest corrections comes with some limitations. It tracks the quickest 10% declines in the S&P 500 following an all-time high -- a caveat that excludes some of the epic episodes in markets, including the Oct. 19, 1987, crash that sent the Dow tumbling 22.6% in one day, the most ever. The market had gone into correction the previous week, eliminating that day from consideration by this measure.

At the same time, the precipitous nature of the decline this month has grabbed the attention of traders and portfolio managers in a way that few previous selloffs have during the market's decadelong run to new highs.

Investors have grown increasingly pessimistic that efforts to stop the spread of the virus will prevent significant damage to the global economy. Some U.S. companies say they could lose as much as half their annual revenue from China if the coronavirus epidemic extends through the summer. American businesses will generate no earnings growth in 2020 if the virus becomes widespread, Goldman Sachs Group's equity analysts warned on Thursday.

"We have to brace ourselves for wave after wave of earnings downgrades," said Paul O'Connor, head of multiasset at Janus Henderson Investors. "The globalization of the virus extinguishes confidence in the V-shaped recovery that was the view last week."

Microsoft warned Wednesday that supply-chain disruptions from the coronavirus would hurt sales this quarter, making it the second major tech company -- after Apple -- to lower expectations because of the epidemic.

European indexes also dropped, with the Stoxx Europe 600 tumbling 3.7%. In Asia, Japan's Nikkei 225 closed 2.1% lower, while South Korea's Kospi declined 1.1%.

Government bonds continued to rally. The yield on the benchmark 10-year U.S. Treasury, which closed at a record low 1.310% on Wednesday, dropped to 1.296% Thursday, according to Tradeweb. Yields move in the opposite direction of bond prices.

A key measure of turbulence in U.S. stocks also rose Thursday, with the Cboe Volatility Index, or VIX, jumping to a multi-year high of 39.16. The options-based gauge tends to rise when markets fall and investors reach for insurance-like contracts to protect their portfolios.

"It's very scary on a personal level, and I think that psychology pervades through the market" said Sam Hendel, president and portfolio manager at Levin Easterly Partners. "As an investor, my job is to keep a cool head."

More than 82,000 people have been infected by the virus and the death toll stands at more than 2,800 globally. On Wednesday, American authorities said a patient in California might be the first U.S. coronavirus case to be diagnosed without a clear explanation for how the disease was transmitted.

"Everyone is now trying to assess what the economic impact will be," said Neil Dwane, global strategist at Allianz Global Investors. "The U.S. is looking at Europe and Japan as evidence of how the world is responding."

Write to Karen Langley at karen.langley@wsj.com, Caitlin Ostroff at caitlin.ostroff@wsj.com and Chong Koh Ping at chong.kohping@wsj.com

(END) Dow Jones Newswires

February 27, 2020 17:03 ET (22:03 GMT)

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