U.S. markets and stock ETFs extended a sell-off Friday and was on pace for their worst week since 2008 as more investors fear a quickly spreading coronavirus contagion will contribute to a global economic recession.

On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) declined 1.5%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 2.7% and SPDR S&P 500 ETF (NYSEArca: SPY) dropped 2.2%. QQQ was now testing its long-term support at the 200-day simple moving average.

Investors have dumped risky assets like stocks, fueling one of the worst broad market sell-offs since the financial crisis, as coronavirus fears escalated and concerns over the economic outlook.

Jeff Chang, COO & Managing Director of Cboe Vest, said the uncertainty around coronavirus is creating havoc on the market, adding that no one knows what this will ultimately mean for the economy.

“Investors appear to be gearing up for choppier markets, as sharp drops historically have been followed by prolonged elevated levels of volatility,” Chang told ETF Trends. “We could see this potentially be fueled further by the escalating uncertainty around the U.S. Presidential election, with Super Tuesday just around the corner. As a result, we are seeing record inflows into our protection-oriented mutual funds and ETFs. That’s because these products—unlike traditional defensive stocks—capitalize on the contractual certainty of options to buffer specific levels of losses. Some of our products, for example, seek to protect the first 10% of losses in the S&P 500 Index, while others protect losses from -5% to -30%.”

According to a Bank of America analysis of data from EPFR Global, about $18 billion has been pulled out of U.S. stock mutual and exchange traded funds for the week ended Wednesday, the biggest of such outflow in nine weeks.

The steep selling has dragged broad benchmarks like the S&P 500 down more than 10% into correction territory from a recent record high just six sessions prior.

“This has been really quick, really deep and, in some respects, unbelievable,” Mark Stoeckle, chief executive officer of Adams Funds, told the Wall Street Journal. “I believe the market will continue to selloff.”

Fueling the concerns, many remain uncertain about the global economic ramifications of a spreading coronavirus. Some have warned that it is too soon to bet on any turns in the stock market and anticipate further pain ahead.

“Market feels panic now…nobody knows how bad or how good the situation will get,” Zhiwei Ren, a portfolio manager at Penn Mutual Asset Management, told the WSJ. “It is better to stay balanced and don’t rush to buy the dip yet.”

Meanwhile, many analysts have downgraded their outlook for growth and corporate earnings in the year ahead. Goldman Sachs Group now expects 0% corporate earnings growth for 2020. Additionally, Bank of America Corp. cut its estimates for global GDP growth due to the coronavirus.

For more information on the markets, visit our current affairs category.

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