The Dow Jones Industrial Average dropped about 926 points, or 3.4%, in afternoon trading.
Stocks open lower after G-7 officials only reaffirmed a commitment to use all appropriate policy tools to protect against downside risks, rather than outlining specific response measures; S&P 500 and Dow -0.6%, Nasdaq -0.7%.
On the flip side, bond prices have been soaring as investors seek safety, pushing yields to record lows. Asian stock markets were mostly higher Wednesday after Wall Street sank despite an emergency US interest cut aimed at defusing fears a virus outbreak might depress global economic activity.
Stocks tumbled Tuesday after the Fed's move wasn't followed by other Group of Seven nations with rate cuts or fiscal stimulus in the face of the virus's growing threat to the global economy. By midafternoon, the S&P 500 had fallen by 3.4 percent, and the Nasdaq was down 3.6 percent.
In a bid to support economic growth the Federal Reserve on Tuesday slashed interest rates, with similar moves coming from Australia and Malaysia's central banks.
But economists warn that while a cheaper credit may encourage consumers, lower interest rates cannot reopen the factories that have been closed for quarantine or shortage of raw materials.
"There is a real fear that things are going to get worse and there is no point in waiting for these fears to be realised", Jim Bianco, president of Bianco Research in Chicago, said of the Fed's rate cut. "Perhaps aside from vaccines, there could be minor speedy and quick alternative to easing the shock for worldwide marketplaces". Many have been anxious that the virus will harm consumer sentiment and business investment around the world.
Britain's FTSE 100 was down 0.2% to 6,555 while the CAC 40 in Paris declined 1.2% to 5,244.
The Dow Jones Industrial Average fell almost 700 points or more than 2.5 percent at the opening bell on Wall Street.
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US stocks sold off sharply on Thursday, with shares of banks and travel companies pummeled, as large swings in the market continued due to uncertainty over the spread of the coronavirus and its economic fallout.
On Wednesday in Asia, the Shanghai Composite Index rose 0.6 percent to 3,011.67 while the Nikkei 225 in Tokyo rose 0.1 percent to 21,100.06.
Yields on 10-year USA government stayed below 1 percent for most of the session - - a sign there are still investors out there who fear a possible recession. It earlier threatened to drop below 0.90% for the first time in history. Yields fall when investors are anxious about weaker economic growth and inflation.
A U.S. Treasury spokesperson said that G7 finance ministers will hold a conference call Tuesday to discuss steps to deal with the economic impacts of the outbreak, and the call will be led by Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell, Reuters reported.
Coronavirus fears got the best of investors again as the USA death toll rose to 11 and California reported the first death outside Washington state, a day after legislators approved a $8.3bn bill to combat the outbreak.
He argued that last week's stock market dip was a normal correction that "was well within historical averages" and that instead of reassuring investors, the Fed's knee-jerk rate cut scared them out of stocks and into the safety of bonds "because they sense inconsistency between this rate cut and the Fed's statement that 'fundamentals of the USA economy remain strong'". That prompted some traders to assume the Fed may foresee an even even bigger financial influence than markets concern. The global marker, May Brent crude lost 73 cents, or 1.4%, at $US51.13 a barrel in Europe.
The industrials and financials sectors led the retreat, falling 4.96 and 4.88 per cent, respectively.
The dollar received to 107.30 yen from Tuesday's 107.24 yen. The euro was flat at $1.1171.