Dow tumbles 900 points in continued virus fears
U.S. stocks tumbled for a fourth consecutive session on Tuesday as bond yields slumped to a record low, raising further concerns over the potential global economic fallout from the coronavirus outbreak.
Stocks accelerated losses after a federal health official warned that the deadly virus could cause “severe” disruptions in the U.S. Investors sought safety in U.S. government bonds, sending the yield on the 10-year Treasury to a record low of 1.328%. That eclipsed its previous low made in July 2016 in the wake of the Brexit vote.
The 10-year Treasury is a closely watched barometer for the U.S. economy. The drop in yields signals growing concern among investors that the virus
outbreak could further dent an already slowing global economy, analysts say.
“The drop in yields was a big red flag,” says Matt Nadeau, wealth advisor at Piershale Financial Group. “It reinforced fears among investors that there’s extra pressure on the global economy.”
The Dow Jones Industrial Average dropped 879.44 points, or 3.2%, to close at 27,081.36, its fourth-biggest point drop ever. The blue-chip average had tumbled more than 1,000 points on Monday, its worst oneday point decline since February 2018.
With Tuesday’s losses, the Dow is down 5% for the year and is 8.4% off its record set on Feb. 12.
The Standard & Poor’s 500 fell 3.1% to end at 3,128.21 after also posting its biggest drop in two years on Monday. The technology-heavy Nasdaq Composite dropped 2.8% to finish at 8,965.61, following its biggest loss since December 2018.
Even with the recent losses in the stock market, investors might not be feeling the pressure in their portfolios just yet due to last year’s strong gains, experts say. If an investor had put $10,000 in an S&P 500 index fund on Dec. 31, 2019, it would have been worth $9,682.52 with dividends through Tuesday’s close, according to S&P Dow Jones Indices.
“The major lesson from this is to plan ahead,” says Tom Plumb, president at Plumb Funds. “Make sure your portfolio is balanced appropriately. Don’t wait for a reminder like this.”
Technology stocks, which rely heavily on China for both sales and supply chains, once again led the decline. Travel-related stocks took another drubbing.
News of clusters of new cases of the coronavirus are rattling markets as they emerge, unleashing waves of volatility.