U.S. STOCKS SLIDE, EXTENDING STEEP DROPS THIS WEEK
Virus outbreak fuels sharp sell-off, wiping out gains for the year.
Worry about economic fallout from the virus has fueled a sell-off this week that’s wiped out the market’s gains for the year. The Dow is down more than 2,000 points in 3 days.
Major U.S. stock indexes gave up early gains and closed mostly lower Wednesday, extending the market’s heavy losses for the week.
The benchmark S&P 500 fell for the fifth straight day after swinging between a 0.6% loss and 1.7% gain. Smaller company stocks bore the brunt of the selling. The bond market continued to flash warning signs as long-term Treasury yields fell further below short-term yields.
Worry about economic fallout from the virus outbreak that originated in China has fueled a sharp sell-off this week that’s wiped out the market’s gains for the year.
The virus continues to spread and threatens to hurt industrial production, consumer spending, and travel. More cases are being reported in Europe and the Middle East. Health officials in the U.S. have been warning Americans to prepare for the virus.
“The market is still digesting the full impact of what the coronavirus could mean for global GDP growth and, more importantly, on earnings growth for a lot of companies,” said Nadia Lovell, U.S. equity strategist at J.P. Morgan Private Bank.
The S&P 500 index fell 0.4%. It’s on track for its biggest monthly decline since May. The Dow Jones Industrial Average dropped 123.77 points, for a three-day loss of 2,034 points. A modest rally in technology stocks helped nudge the Nasdaq composite to a 0.2% gain.
European markets were mostly higher and Asian markets fell.
A burst of morning buying had stocks on track for modest gains, but the rally mostly faded by the end of the day, reflecting ongoing concerns among investors about the new coronavirus.
The outbreak has now infected more than 81,000 people globally and continues spreading. Brazil has confirmed the first case in Latin America. Germany, France and Spain were among the European nations with growing caseloads. New cases are also being reported in Middle Eastern nations.
U.S. cases currently total 57, and the White House has requested $2.5 billion for vaccine development. U.S. health officials called on Americans to be prepared for the disease to spread in the United States.
“The bond market is sending us some warning signals that we should pay attention to and that’s what you see playing out in the market today,” Lovell said.
Investors have been moving more money into bonds in the wake of the outbreak. Traders are concerned the global economy could slow down as the world’s second-largest economy struggles to contain the outbreak.