Dow Plunges 1,000 Points on Fears That Coronavirus Will Tank Global Economic Growth

FILE PHOTO: A man is reflected on an electronic board showing a graph analyzing recent change of Nikkei stock index outside a brokerage in Tokyo, Japan, January 7, 2019. REUTERS/Kim Kyung-Hoon

Wall Street plunged Monday after a spike in the number of reported cases of coronavirus fueled fears that the epidemic would have a serious impact on global economic growth.

The Dow Jones Industrial Average plummeted by 1,003 points in midday trading Monday, after a volatile session that saw the blue-chip index lose 979 points at the opening bell, erasing all gains for the year. The tech-heavy Nasdaq fell by 4 percent, with the S&P 500 dropping 3.2 percent.

Travel-related stocks continued to take heavy hits as the epidemic restricted movement and discouraged vacationers, with Delta Air Lines and American Airlines falling by 7 percent. Casino operators Wynn Resorts and MGM Resorts each tumbled by around 4 percent.

Monday’s selloff came as South Korea raised the country’s coronavirus alert to its highest level and Italy saw 130 new cases of the disease. While the World Health Organization stopped short of calling the outbreak a pandemic, it did note on Monday that the virus has “unlimited potential.”

Scientists say the new virus, dubbed COVID-19, is both more easily transmitted and less deadly than the SARS epidemic, but much still remains unknown. As a result, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said, “Markets are now slaves to the news flow.”

Investor reaction to the wider spread of coronavirus led to a volume of trading so heavy that some clients even had difficulty accessing their accounts, CNBC reported.

“Due to higher-than-usual volumes, some clients may have experienced delays in accessing some online features as the market opened but our systems are fine and up and running,” Schwab Public Relations told CNBC. Fidelity, the largest online broker, said, “Some clients are experiencing technical issues and we are working as quickly as possible to resolve.”

The rate at which the virus was spreading in China appears to be slowing. An announcement of 409 new cases Monday was the fifth day in a row that the number of new daily cases had fallen below 1,000. Outside of China, though, a spate of outbreaks presented fresh cause for concern.

“The spike in infections in South Korea, mostly concentrated in the congregation of a single church, a surge in cases in Italy, and news of an outbreak in Iran, where the health care system is of uncertain quality and the government is secretive, has triggered fears that China’s aggressive quarantining efforts won’t keep the virus from spreading globally,” Shepherdson wrote in a client note.

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Source: NBC News