Futures tank as virus fears spur flight to safety

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By Medha Singh

(Reuters) – U.S. stock index futures dropped sharply on Friday as compounding fears about the economic damage from the coronavirus epidemic drove investors to perceived safe havens such as bonds and gold.

The outbreak, which has infected nearly 100,000 globally, has crippled supply chains and prompted a sharp cut to global economic growth forecasts for 2020.

Starbucks Corp (NASDAQ:) became the latest company to signal a business hit due to fewer customers at its Chinese stores, while Costco Wholesale Corp (NASDAQ:) said it was struggling to keep up with demand for essentials, including disinfectants.

The prospect of cheaper money had briefly lifted sentiment after the Federal Reserve slashed interest rates in a surprise move on Tuesday, but it later led to panic about the extent of the economic impact of the coronavirus.

Following wild swings since Monday, the benchmark S&P 500 looked set to close out the week more than 10% below its record close on Feb. 19. The , Wall Street’s fear gauge, has marked its sharpest ever increase this quarter.

Growth worries are also expected to overshadow a closely watched monthly employment report due to at 8:30 a.m. ET. It is likely to show U.S. jobs growth slowed in February.

At 7:18 a.m. ET, were down 537 points, or 2.06%. S&P 500 e-minis were down 67.5 points, or 2.24% and were down 222.5 points, or 2.57%.

The benchmark hit an all-time low on Friday, pressuring rate-sensitive bank stocks. [US/]

Bank of America Corp (NYSE:), Citigroup Inc (NYSE:), JPMorgan Chase (NYSE:) & Co, Goldman Sachs (NYSE:), Wells Fargo (NYSE:) & Co and Morgan Stanley (NYSE:) dropped between 2.7% and 3.9% in premarket trading.

American Airlines (NASDAQ:) and United Airlines, which have been battered on depressed travel demand, slid more than 3% each.

Energy companies Schlumberger (NYSE:), Marathon Petroleum Corp (NYSE:) and EOG Resources Inc (NYSE:) fell more than 3%, tracking a 4% slump in oil prices. [O/R]

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