U.S. stocks sink for second day in a row
Stocks slumped again on Wall Street on Tuesday, piling on losses a day after the market’s biggest drop in two years as fears spread that the growing virus outbreak will put the brakes on the global economy.
— Stocks slumped again on Wall Street on Tuesday, piling on losses a day after the market’s biggest drop in two years as fears spread that the growing virus outbreak will put the brakes on the global economy.
Nervous investors snapped up low-risk U.S. government bonds, sending the yield on the 10-year Treasury note to a record low.
The benchmark S&P 500 has lost 7.6% over the last four days, it’s worst such stretch since the end of 2018. Tuesday also marked the first back-to-back 3% losses for the index since the summer of 2015.
The latest wave of selling came as more companies, including United Airlines and Mastercard, warned that the outbreak will hurt their finances, and more cases were reported in Europe and the Middle East, far outside the epicenter in China. Meanwhile, U.S. health officials called on Americans to be prepared for the disease to spread in the United States, where there are currently just a few dozen cases.
The Dow Jones Industrial Average dropped 879 points, for a twoday loss of 1,911 points. Travel-related stocks took another drubbing, bringing the two-day loss for American Airlines to 16.9%. The large publicly traded cruise operators have also suffered double-digit losses.
The worst-case scenario for investors — where the virus spreads around the world and cripples supply chains and the global economy — hasn’t changed in the last few weeks. But the probability of it happening has risen, said Yung-Yu Ma, chief investment strategist at
BMO Wealth Management.
“It’s the combination of South Korea, Japan, Italy and even Iran” reporting virus cases, Ma said. “That really woke up the market, that these four places in different places around the globe can go from low concern to high concern in a matter of days and that we could potentially wake up a week from now and it could be five to 10 additional places.”
The S&P 500 index fell 97.68 points, or 3%, to 3,128.21. The Dow Jones Industrial Average sank 879.44 points, or 3.2%, to 27,081.36, following a drop of more than 1,000 points Monday. The Nasdaq lost 255.67 points, or 2.8%, to 8,965.61, erasing its gains for the year. The Russell 200 index of smaller company stocks dropped 55.53 points, or 3.4%, to 1,572.57.
European markets also fell. Markets in Asia were mixed.
Technology stocks, which rely heavily on China for both sales and supply chains, once again led the decline. Apple dropped 3.4% and chipmaker Nvidia slid 4.1%.
Bond prices continued rising. The yield on the 10-year Treasury fell as low as 1.31%, a record, according to TradeWeb, before recovering somewhat to 1.32% in the afternoon. The yield is down from 1.37% late Monday and far below the 1.90% it stood at in early 2020.
The lower bond yields, which force interest rates lower on mortgages and other loans, weighed on banks. JPMorgan Chase slid 4.5% and Bank of America fell 5%.
Real estate companies and utilities also declined, though they held up better than the rest of the market as investors favored safe-play stocks.
The viral outbreak that originated in China has now infected more than 80,000 people globally, with more cases being reported in Europe and the Middle East.