Stock market plunges again on fears virus will stunt economy

Stocks fell sharply again Tuesday on Wall Street, 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 S&P 500 has lost 7.6% in the last four days since hitting a record high last Wednesday. That’s the benchmark index’s worst such stretch since the end of 2018, resulting in $2.14 trillion in losses, according to S&P Global. Tuesday also marked the first backto-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 just a few dozen cases.

The Dow Jones industrial average dropped 879 points, for a two-day loss of a whopping 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 doubledigit 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, the 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.”

The S&P 500 index fell 3%, the Dow lost 3.2% and the Nasdaq dropped 2.8%, erasing its gains for the year.

European markets also fell. Markets in Asia were mixed.

Technology stocks, which rely heavily on China for sales and supply chains, once again led the decline. Apple dropped 3.4%, and chipmaker Nvidia fell 4.1%.

Bond prices continued to rise. The yield on the 10year Treasury fell as low as 1.31%, a record, according to TradeWeb, before recovering somewhat to 1.35% in the late 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 fell, though they held up better than the rest of the market as investors favored safeplay 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. The majority of cases and deaths remain centered in China, but the rapid spread to other parts of the world has spooked markets and raised fears that it will hurt the global economy.

On Tuesday, U.S. health officials warned that it’s inevitable the virus will spread widely in America.

“It’s not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen — and how many people in this country will have severe illness,” Dr. Nancy Messonnier of the national Centers for Disease Control and Prevention said in a call with reporters.

United Airlines tumbled 6.5% after withdrawing its financial forecasts for the year because of the impact on demand for air travel. Mastercard dropped 6.7% after saying the impact on cross-border travel and business could cut into its revenue, depending on the duration and severity of the virus outbreak.

Moderna surged 27.8% after the company sent its potential virus vaccine to government researchers for additional testing. The biotechnology company is one several drug developers racing to develop vaccine.

Energy companies have been some of the hardest hit on worries that a weakened global economy will burn less fuel. Exxon Mobil is down 10.2% over the last four days, and the slump has wiped away nearly $26 billion in market value.