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(Reuters) – U.S. stock index futures dropped on Friday as a surge in coronavirus cases, which have already wiped nearly $3 trillion off stocks listed on the benchmark S&P 500 this week, triggered recession fears.

The index confirmed its fastest correction in history in volatile trading in the previous session as it plunged more than 10% from its record close just a week ago. The Dow and Nasdaq indexes also fell below those levels.

Even as the outbreak eases in China, investors have been rattled by the rapid spread of the disease in other countries, which now account for about three-quarters of new infections.

As the world prepares for a likely pandemic, an inversion of the U.S. Treasury yield curve deepened further, sounding recession alarms. All three main stock indexes are set to record their sharpest weekly drop since the global financial crisis in 2008.

“Equities have moved in a linear fashion to price in worse case outcomes, while the virus news flow is happening at a much slower pace,” said Art Hogan, chief market strategist at National Securities in New York.

“The markets will get to their bottom long before the negative news hits a crescendo.”

At 7:38 a.m. ET, Dow e-minis were down 197 points, or 0.77%. S&P 500 e-minis were down 23 points, or 0.78% and Nasdaq 100 e-minis were down 58.75 points, or 0.7%.

While the magnitude of the economic damage from the containment measures, which have crippled supply chains and hit business investment, remains unclear, analysts have sharply downgraded their outlook for growth and corporate earnings.

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Traders are now pricing in an interest rate cut by the Federal Reserve as soon as next month, but many have expressed doubts about how this would mitigate the impact of the outbreak.

“Lower interest rates will do next to nothing to counter a supply side shock like this one, and even the positive effects on demand are questionable if entire economies start going into lockdown,” said Marios Hadjikyriacos, investment analyst at online broker XM.

Investors now await inflation data from the Commerce Department on Friday, which is likely to show no month-over-month change in the reading for core PCE index in January. The reading, due at 8:30 a.m. ET, is the Fed’s preferred inflation measure.

Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur

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