Stocks tumble as virus fears grow
U.S. stocks fell sharply Monday, sending the Dow Jones Industrial Average down by more than 450 points, as investors grappled with fresh worries about the spread of a new virus in China that threatens global economic growth.
The sell-off gave the Dow its first 5-day losing streak since early August and handed the S&P 500 its worst day since early October. Both indexes were off about 1.5%, giving up a significant portion of their gains this month.
The latest bout of selling on Wall Street came after China announced a sharp rise in cases of the virus.
Airlines, resorts and other companies that rely on travel and tourism suffered steep losses. Gold prices rose as did bonds as traders sought refuge in safer holdings. The yield on the 10-year Treasury
fell to 1.60%, its lowest level since October. The market’s broad slide followed a sell-off in markets in Europe and Japan.
“Over the weekend you saw more cases,” said Quincy Krosby, chief market strategist at Prudential Financial. “That got investors and traders worried that this may be a longer event. The next question is, ‘What happens to global growth if this does continue and magnify?’”
The Dow Jones Industrial Average fell 453.93 points, or 1.6%, to 28,535.80. The Dow had been down nearly 550 points. The S&P 500 index dropped 51.84 points, or 1.6%, to 3,243.63. The Nasdaq lost 175.60 points, or 1.9%, to 9,139.31. The Russell 2000 index of smaller company stocks gave up 18.09 points, or 1.1%, to 1,644.14.
Most markets in Asia were closed for the Lunar New Year holiday, but Japan’s Nikkei fell 2.03%, its biggest decline in five months. European markets also slumped. Germany’s DAX and France’s CAC 40 dove 2.7%.
Chinese health authorities have confirmed 2,750 cases of the virus along with 81 related deaths as authorities extended a week-long public holiday by an extra three days as a precaution against having the virus spread still further. The virus has spread to a dozen countries, including the U.S. Besides the threat to people’s lives and health, investors are worried about how much damage the virus will do to profits for companies around the world.
Even if they’re thousands of miles away from Wuhan, the interconnected global economy means U.S. companies have plenty of customers and suppliers in China. It’s the world’s second-largest economy, and it accounts for 6% of all revenue for S&P 500 companies over the last 12 months. That’s nearly double any other country besides the United States, according to FactSet.