WASHINGTON (Reuters) - Senior officials in President Donald Trump’s administration on Sunday tried to calm market panic that the coronavirus could cause a global recession, saying the U.S. public had over-reacted and that stocks would rebound due to the American economy’s underlying strength.

FILE PHOTO: U.S. President Donald Trump passes U.S. Vice President Mike Pence during a news conference on the coronavirus outbreak at the White House in Washington, U.S., U.S., February 29, 2020. REUTERS/Joshua Roberts/File Photo

The S&P 500 index tumbled 11.5% last week as the virus accelerated beyond China’s borders, the worst weekly drop since the 2008 global financial crisis. Roughly $4 trillion has been wiped off the value of U.S. stocks.

The selling continued when S&P 500 e-mini futures resumed trading Sunday night, falling more than a 1%. But they later recouped initial losses on growing expectations that the U.S. Federal Reserve and other global central banks will take action soon to cushion the economic fallout from the epidemic.[MKTS/GLOB]

Futures rose for the safe-haven U.S. 10-year Treasury note, pushing implied yields for that instrument below 1% for the first time.

“We need to see more of a peak panic before investors are convinced it’s time to go in,” Quincy Krosby, chief market strategist for Prudential Financial Inc, said on Sunday, adding that a recovery in the 10-year yield would be a gauge of steadying sentiment.

Economists have begun to worry that the losses could soon start to weigh on consumer spending even before the virus becomes widespread in the United States.

U.S. financial regulators who will gather on Wednesday face their most challenging week in a decade. One official told Reuters that the coming days will determine whether the federal government must take measures to bolster market confidence.

Speaking to NBC’s “Meet the Press” on Sunday, Vice President Mike Pence, who is leading the administration’s response to the virus, said that the market “will come back.”

“The fundamentals of this economy are strong. We just saw some new numbers come out in housing and consumer confidence and business optimism. Unemployment is at a 50-year low. More Americans are working than ever before,” Pence said.

On Friday afternoon, Federal Reserve chair Jay Powell sought also to quell fears, stoked by dire economic data from China, flagging that the central bank would take action if necessary to support the economy, which he said remained strong.

Trump, seeking re-election on Nov. 3, has pressed his view that the risk to the American people from the virus remains “very low” even as he has faced Democratic criticism that his administration had bungled its response to the outbreak.

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When asked on the “Fox News Sunday” program if the American people are over-reacting to the current threat, U.S. Health and Human Services Secretary Alex Azar responded, “Yes, absolutely.”

The World Health Organization’s director-general Tedros Adhanom Ghebreyesus likewise told CNBC on Sunday that the market panic was uncalled for, even after the organization on Friday raised its threat assessment for the virus to its highest level.

“Global markets ... should calm down and try to see the reality,” he said.

The fast-spreading virus has infected around 85,000 people in 53 countries. China, the world’s second-largest economy and epicenter of the outbreak, is home to the vast majority of cases. About 70 have been diagnosed in the United States.

A Washington state man in his 50s with underlying health conditions was the first American to die from the virus, officials said Saturday.

Writing on Twitter late on Saturday, Mohamed El-Erian, chief economic adviser to Allianz, said reassuring words may not be enough to stem the rout, given the negative news.

“Absent anything else, I worry that this may still tip net negative” on Monday trading resumption, he wrote.

BUSINESSES REACTION

The rapid spread of the virus has led businesses globally to restrict travel, send workers home and cancel conferences, hitting stocks in the aviation, gambling, tourism and luxury goods sectors. That disruption to global supply chains and productivity has darkened the outlook for a world economy already struggling with the fallout of the U.S.-China trade war.

So far, the outbreak’s biggest measurable effect has been in China, but a purchasing managers survey last month signaled it was beginning to hit U.S. businesses. Another batch of U.S. economic indicators due out early this week will be closely watched for evidence of a growing impact.

Investors now fully expect the Fed to respond with interest rate cuts this month. Questions remain over how far the Fed would cut and what more officials there and at other central banks can do beyond lowering borrowing costs already at rock-bottom levels for more than a decade.

In a blog post on Sunday, Washington trade group the Bank Policy Institute, said the Fed could explore additional measures to stimulate credit, including cutting the deposits banks must hold on reserve with the Fed and increasing the availability of liquidity through its discount window.

For a graphic on U.S. stocks have fallen hard:

Pence said the U.S. government is doing “everything possible” to prevent the virus from spreading and that he is “confident” the United States is prepared.

Azar said that during a meeting of the White House’s coronavirus task force on Saturday, U.S. Treasury Secretary Steven Mnuchin had discussed the negative stock market reaction, saying that much of it was driven by uncertainty. Azar said the administration aimed to quell that uncertainty by being as transparent as possible about latest developments.

“That’s why we are trying to give the American people all the information we have when we have it so they don’t think there’s secret information they’re not getting,” Azar said.