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Coronavirus fears grip markets again as stocks and bond yields slide

The Dow Jones Industrial Average sank 968 points Thursday, or 3.6% wiping out most of its surge of 1,173 points a day earlier.

NEW YORK — Stocks and bond yields fell sharply Thursday as fears about fallout from the virus outbreak sent more shudders through markets. 

The Dow Jones Industrial Average sank 968 points, or 3.6% wiping out most of its surge of 1,173 points a day earlier. Treasury yields sank to more record lows as investors plowed money into low-risk investments. 

The yield on the 10-year Treasury, a benchmark for mortgages, fell to 0.91%. 

Markets have been stuck on an up-and-down roller coaster for weeks because of uncertainty about how much damage the outbreak of the new coronavirus will do to the global economy. 

Stocks had opened sharply lower on Wall Street, erasing 2% from major indexes, a day after surging 4% as the mood swings back to fear. It may be a reaction to the overnight news that the airline industry is bracing for big losses due to the coronavirus outbreak.

European markets quickly lost early gains Thursday and were down more than 2%.

Those came one day after the Dow Jones gained 1,173.45 points Wednesday, its second 1,000 point advance of the week. Shares in Europe and Asia also advanced Thursday, taking their cue from a surge on Wall Street as governments and central banks took more aggressive measures to fight the virus outbreak and its effects on the economy. 

The virus-fueled volatility in financial markets is into its its third week as new cases and deaths rose globally. That is putting more pressure on companies, with businesses lowering their earnings targets or canceling forecasts altogether as it remains unclear how long the outbreak will remain disruptive. Treasury yields dropped again as investors flocked to safe investments. The price of gold also rose.  

RELATED: Airlines could lose $113 billion in coronavirus outbreak

RELATED: British airline collapses as coronavirus cuts flying demand

International Air Transport Association says the virus outbreak that began in China could cost airlines as much as $113 billion in lost revenue due to the collapse of air travel. Just two weeks ago, that same group predicted the impact would be less than $30 billion.

British airline Flybe collapsed overnight, leaving passengers stranded and threatening the viability of regional airports across the U.K.

Airlines are taking steps to deal with a cut in demand as people avoid unnecessary travel. United Airlines is cutting both domestic and international flying, freezing hiring and asking employees to volunteer for unpaid leave. The Associated Press reports Delta will reduce its weekly flying schedule to Japan through April 30 and suspend summer seasonal service between Seattle and Osaka for 2020.

Amazon has reportedly asked its 800,000 employees worldwide to postpone non-essential travel. 

After losing more than 3,500 points last week, the Dow Jones gained 1,294 points Monday. It lost 786 Tuesday after a surprise half-percent Fed rate cut failed to boost confidence. Then the Dow rallied again Wednesday.

Credit: AP
Trader Steven Kaplan watches the numbers at the closing bell on the floor of the New York Stock Exchange, Monday, March 2, 2020.

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