Canada’s main stock index plunged into correction territory on Friday as an increase in global coronavirus cases unsettled investors worried about its economic impact.

Investors typically consider a technical correction in a security or index to be a drop of 10 per cent or more from its recent peak.

At 12:53 p.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 521.54 points, or 3.12 per cent, at 16,0195.90. The index was about 11 per cent down from a record high touched on Feb. 20.

The index was set to lose more than 10 per cent for the week, its worst week since the 2008 financial crisis.

World stocks shed almost $6 trillion this week as fears of a coronavirus pandemic surged after five countries reported their first cases.

Canada’s energy sector dropped 2.4 per cent as oil prices plummeted amid fears of slowing economic growth.

The financials sector slipped 2.7 per cent. The industrials sector fell 2.5 per cent.

U.S. stocks fell sharply Friday and were on track for their worst week since October 2008 as the spreading coronavirus threatens to derail the global economy.

The virus outbreak has been shutting down industrial centres, emptying shops and severely crimping travel all over the world. More companies are warning investors that their finances will take a hit because of disruptions to supply chains and sales. Governments are taking increasingly drastic measures as they scramble to contain the virus.

The Dow Jones Industrial Average was down 557.38 points, or 2.2 per cent, at 25,209.26.. It was down as many as 1,085 points earlier.

The S&P 500 lost 1.5 per cent and the Nasdaq fell 0.8 per cent. China’s benchmark index fell 3.7 per cent and Germany’s DAX fell 4.6 per cent.

The benchmark S&P 500 index has now lost 15 per cent since hitting a record high just 10 days ago. The rout has knocked every major index into what market watchers call a “correction,” or a fall of 10 per cent or more from a peak. The last time that occurred was in late 2018, as a tariff war with China was escalating. Market watchers have said for months that stocks were heavily overpriced and long overdue for another pullback.

Bond prices soared again as investors sought safety and became more pessimistic about the economy’s prospects. That pushed yields to more record lows. The yield on the 10-year Treasury note fell sharply, to 1.17 per cent from 1.30 per cent late Thursday. That yield is a benchmark for home mortgages and many other kinds of loans.

Crude oil prices slumped 6.5 per cent over worries that global travel and shipping will be severely crimped and hurt demand for energy. The price of benchmark U.S. crude has now fallen 17 per cent this week.

The weeklong market sell-off follows months of uncertainty about the spread of the virus, which hit China in December and shut down large swaths of that nation by January. China is still the hardest hit country and has most of the 83,000 cases worldwide and related deaths.

Uncertainty turned into fear as the virus started jumping to places outside of the epicenter and dashed hopes for containment.

Airlines and cruise operators have suffered some of the worst hits as flight routes are cancelled, along with travel plans. Big names like Apple and Budweiser brewer AB InBev are part of a growing list of companies expecting financial pain from the virus. Dell and athletic-wear company Columbia Sportswear are the latest companies expecting an impact to their bottom lines.

A big concern investors have is that the stock market rout could have a psychological effect on consumers, making them reluctant to spend money and go to crowded places like stores, restaurants and movie theatres.

The late-2018 stock market plunge, for instance, derailed holiday sales that year. Now, analysts are worried that the latest stock swoon could cause consumer spending — which makes up some 70 per cent of the economy — to contract again.

Craig Johnson, president of Customer Growth Partners, a consumer consultancy, says he had expected annual retail sales to be up 4.1 per cent, but he now says it could increase just 2.2 per cent if the impact of the new virus in China persists beyond April.

`’This is a moving target right now,“’ he said. `’There is a lot of uncertainty.”

Nitin Jain, managing director of the retail practice at AlixPartners, said that while sales of everyday items like canned goods and medical supplies could increase in the short term, sales of luxury goods could tail off as high-end shoppers become nervous.

Many companies face the prospect of crimped financial results with their stocks already trading at high levels relative to their earnings. Before the virus worries exploded, investors had been pushing stocks higher on expectations that strong profit growth was set to resume for companies after declining for most of 2019. If profit growth doesn’t ramp up this year, that makes a highly priced stock market even more vulnerable.

Nearly 60 nations representing every continent, except Antarctica, have confirmed cases. The virus outbreak has prompted a wide range of reactions from nations hoping to contain its spread and economic impact.

The Geneva auto show was cancelled as Swiss authorities banned large events of more than 1,000 people. Parts of Italy’s northern industrial and financial centre remain under quarantine. Japan is preparing to close schools nationwide. The U.S. is preparing for the virus after a case unrelated to travel was confirmed in California.

Reuters and The Associated Press