Stocks fall on fear outbreak of virus will dent economy

The stock market got off to roaring start in January, until a virus outbreak that started in China wiped out its gains.

The Dow Jones Industrial Average skidded more than 600 points Friday as the outbreak continued to widen, stoking fears that the travel restrictions and other uncertainties caused by the health emergency in the world’s second-largest economy could dent global growth.

Tech companies, which do a lot of business with China, led the losses. Airlines fell after Delta and American suspended flights to and from China. The sell-off erased the S&P 500’s gains for January and gave the benchmark index its biggest weekly loss since August.

Just two weeks ago, the S&P 500 had closed at an all-time high, having climbed around 13% since early October. A preliminary trade deal signed by the U.S. and China earlier in the month eased a big source of uncertainty in the markets. Volatility was running at 12-month lows, and even a dust-up between the U.S. and Iran didn’t rock markets.

Then came the virus outbreak. Markets around the globe have sold off on concerns about the potential economic impact of the outbreak. Hong Kong’s Hang Seng fell 6.7% this week, and South Korea’s Kospi dropped 5.7%. China’s stock markets reopen Monday after being closed since Jan. 23 for the Lunar New Year. The U.S. stock market, which had calmly been setting record after record, suffered its worst January since 2016 and its first monthly loss since August.

American Airlines fell 3.2%, and Delta Air Lines slipped 2.4%. Apple, which relies on Chinese consumers for sales and factories for supplies, fell 3.9%.

The S&P 500 sank 58.14 points, or 1.8%, to 3,225.52. The Dow fell 603.41 points, or 2.1% to 28,256.03. The Nasdaq dropped 148 points, or 1.6%, to 9,150.94.

Bond prices rose. The yield on the 10-year Treasury fell to 1.51% from 1.55% late Thursday. In another sign of fear in the market, the yield on the three-month Treasury rose above the 10-year yield, a relatively rare occurrence that hasn’t happened since October. Investors see such inversions as a fairly reliable signal of a recession within a year or so.

CHINATOPIX Quarantine workers check identity documents Friday as passengers exit a chartered plane taking them home from Bangkok at Wuhan Tianhe International Airport in Wuhan, China.