Virus fears set off volatile day on Wall St.

NEW YORK — U.S. stocks spun lower in a dizzying day of trading Thursday as worries about the viral outbreak that started in China knocked the S&P 500 off its record high.

The market had started the day off higher following another round of stronger-than-expected reports on the U.S. economy, but it slumped suddenly in the late morning. The S&P 500 was down as much as 1.3 percent at one point, Treasury yields fell and the price of gold rose, before the moves moderated in the afterOne noon.

By the close of trading, the S&P 500 index had trimmed its loss to 0.4 percent, down 12.92 points to 3,373.23. The Dow Jones Industrial Average fell 128.05 points, or 0.4 percent, to 29,219.98, after earlier being down as many as 388 points. The Nasdaq composite lost 66.21, or 0.7 percent, to 9,750.96.

Market watchers said they didn’t see one clear trigger for the movements, which were reminiscent of the market’s sudden shifts during the height of the U.S.-China trade war, when stocks would swing sharply following tweets from President Donald Trump.

“You have this push and pull between good U.S. economic data and coronavirus fears,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management. “You’re playing that back and forth, almost as you were during the trade war, where people were reacting to changes minute by minute.”

Stocks had been pushing higher for weeks, as investor belief hardened that stimulus and other efforts by central banks and governments around the world could limit the economic pain created by the virus. China’s central bank on Thursday cut its one-year prime rate to 4.05 percent from 4.15 percent.

But critics said stocks may have run too high, too fast given how uncertain COVID-19’s full impact on the global economy will be. South Korea’s fourth-largest city, far from the center of the viral outbreak in China, urged residents to stay inside. The worry is that the number of new cases, which has been falling, could re-accelerate.

“Until we get a more definitive sign that the top is in, you’re going to have volatility back and forth and trades off coronavirus headlines,” Schutte said.

measure of fear in the stock market, which shows how much traders are paying to protect themselves from future swings in the S&P 500, was up nearly 20 percent at one point in midday trading before more than halving the gain.

Besides the toll on human lives, investors worry about how much economic damage the virus will cause. It’s already led to sharp drop-offs in manufacturing, travel and other economic activity in China, and the fear is how long that will last and how far it will spread in the interconnected global economy.