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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowU.S. markets fell sharply Thursday, extending stock losses in one of the worst weeks since the 2008 financial crisis as coronavirus cases continue to snowball, threatening world economies.
The Dow Jones industrial average closed down nearly 1,200 points, or 4.4 percent, after a roller coaster day. The Standard & Poor’s 500 and Nasdaq composite both fell by similar percentages.
Rattling markets in the afternoon were reports that California, which on Wednesday reported the first “community spread” case, is now monitoring 8,400 people for potential coronavirus infections.
The three major U.S. stock indexes now are in correction territory, a 10% reversal from recent highs—a signal to numbers-obsessed Wall Street that something is amiss. The speed of the declines was startling, with the Dow Jones industrial average tumbling from its all-time peak in only 10 sessions.
“A 10% correction doesn’t mean anything to Joe Q. Public,” said Kenny Polcari of SlateStone Wealth. “But to Wall Street, which marks everything by numbers, it suggests a turning point in market psyche.”
Polcari said the good news about the panic-driven correction is that it suggests an emotional response and may be only temporary.
“A slower decline based on crumbling market fundamentals, which is not the case so far, would be more worrisome,” Polcari said.
Analysts expected the market to rebound strongly after worldwide markets plunged on Monday. But coronavirus cases have popped up around the world, squashing repeated stock market rallies. The extreme volatility could persist until there are signs that the outbreak is under control, analysts say, despite warnings from health officials that community spread in the U.S. appears inevitable.
“The current and largest concern now is if consumers start pulling back on their spending. Consumer spending has been supporting the economy,” said Howard Silverblatt of S&P Dow Jones Indices.
Global markets also shuddered as the outbreak continues to spread beyond China. Japan’s Nikkei was down more than 2% as many Japanese schools were closed through early April.
European stocks also entered correction territory on Thursday. The Pan-European Stoxx 600 fell 4%. Britain’s FTSE dropped 3.5%, and Germany’s DAX fell 3.2%. In Italy—the country with Europe’s weakest economic growth in 2019—Prime Minister Giuseppe Conte this week said the economic blow could be “very strong.”
From an economic standpoint, much of the focus had been on coronavirus’s repercussions for global supply chains, which rely heavily on manufacturing and production from Chinese factories. But now that public health officials are bracing for the outbreak to spread in the United States, experts worry about an additional threat to the economy. Daily routines and consumer spending could grind to a halt if schools are closed, large gatherings are canceled and businesses close their doors.
“Every day we think we could be near a bottom, and every day we are not,” Cowen analyst Helane Becker wrote in a note early Thursday. “Today, there were more reports of the virus showing up in places like Croatia, France, Germany, Austria, Greece and elsewhere. Borders are lines on a map. The virus has spread, and the question is how much do people change their travel plans.
The rapid spread of the coronavirus continues to raise the specter of a global pandemic. South Korea announced 505 new cases on Thursday, bringing its total to 1,766, including a U.S. soldier stationed on the peninsula. Iran reported 245 confirmed cases and a death toll of 26. Religious pilgrimages in Saudi Arabia have been halted, and Tokyo’s plans to host the 2020 Olympics hang in the balance.
Even so, Trump struck an optimistic tone Wednesday evening during a White House news conference. Trump said the risk to America was “very low” and that the outbreak would swiftly be contained. Trump announced Vice President Pence will lead the administration’s response to the outbreak.
“We’ve had tremendous success, tremendous success beyond what many people would’ve thought,” Trump said. “We’re very, very ready for this.”
But immediately following Trump’s comments, Health and Human Services Secretary Alex Azar and Centers for Disease Control and Prevention Principal Deputy Director Anne Schuchat warned Americans to prepare for the number of cases to grow.
“We can expect to see more cases in the United States,” Azar said.
“We do expect more cases,” Schuchat said.
Coronaviruses are a large family of viruses whose effects range from causing the common cold to triggering much more serious diseases, such as severe acute respiratory syndrome, or SARS.
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