Horrid week has investors seeking respite as Dow sinks to four-month low

Spring has sprung — just not in US stocks, where a harrowing week has walloped traders with echoes of February’s correction.

In the past five years, there have been only two other stretches with losses of this magnitude. The S&P 500 Index is down 6 per cent. And the picture looks just as bad for the Dow Jones Industrial Average, which sank to a four-month low by the Friday close. Both indexes suffered their steepest weekly drop in more than two years.

Equities are now teetering near -- and for blue chips, below -- levels seen at the worst point in February’s volatility-fueled meltdown. At the epicenter this time is US President Donald Trump, with his China tariffs driving Boeing Co. down more than 5 per cent in a single session on Thursday and losses rippling across industries from technology to banks.

“Investors that have for months relied on Trump’s pro-business rhetoric are now caught off guard,” said Matt Maley, equity strategist at Miller Tabak & Co. “Trade tariffs are a big change and China’s response can even get stronger. There isn’t too much to be optimistic about: investors’ concern associated with Trump’s tariffs isn’t going to be resolved neither next week nor the week after.”

Consider this as a worrying sign of investor fragility: the S&P 500 has closed lower than the midpoint of its daily range for 10 straight days, the longest stretch since at least 1982. That suggests traders are finding reasons to dump shares in the afternoon rather than buy dips.

Friday was a case in point. The S&P 500 fluctuated for most of the morning before sinking as much as 2.2 per cent in the afternoon, coming within 0.2 per cent of its Feb. 8 closing low. The Cboe Volatility Index jumped nearly 7 per cent to the highest level since early March.

Against the violent moves in equities, other asset classes looked relatively tame. Yields on 10-year Treasuries slipped three basis points on the week, the dollar lost some ground, and gold gained. Oil ignored the risk-off tone, jumping as Trump’s appointment of a new national security adviser heightened the possibility of sanctions against Iran.

But with every sector trading in the red, stock investors had nowhere to hide. Concern over the tariffs on $50 billion of Chinese goods roiled industrial and material companies. China has already hit back, unveiling its own levies on $3 billion of US imports. And its ambassador to the US wouldn’t rule out the possibility of the Asian nation scaling back purchases of Treasuries in response.

Bank of America , the best-performing big bank stock since Trump’s election, tumbled 9.3 per cent this week. Facebook plunged 14 per cent in the throes of a privacy scandal, leading tech megacaps lower.