Stocks fell sharply on Monday as the number of coronavirus cases outside China surged, stoking fears of a prolonged global economic slowdown from the virus spreading.
The Dow Jones Industrial Average traded 782 points lower, or 2.7%. The S&P 500 slid 2.5% while the Nasdaq Composite traded 3% lower. At its low of the day, the Dow was down 997.04 points.
Monday’s drop put the Dow on pace for its biggest one-day point drop since August, when it lost 800 points.
Airline stocks Delta and American were both down more than 6% while United traded 4.4% lower. Shares of casino operators Las Vegas Sands, and Wynn Resorts dropped at least 3.5% each. MGM Resorts slid 4.4%.
Chipmakers were also down broadly. Nvidia shares were down more than 6% while Dow-component Intel traded 2.9% lower. AMD dipped 7.5%. The VanEck Vectors Semiconductor ETF (SMH) was down by 3.9%.
Apple and its suppliers took a hit as well. Shares of the iPhone maker were down by 3.4%. Skyworks Solutions and Qorvo dropped 3.2% and 1.9%, respectively.
Legendary investor Warren Buffett said the coronavirus spread has softened up the U.S. economy, but noted it its still healthy. “Business is down but it’s down from a very good level,” Buffett told CNBC’s Becky Quick on “Squawk Box.” “You look at car holdings —railcar holdings, moving goods around. And there again, that was affected by the tariffs too because people front-ended purchases, all kinds of things.” Buffett added he still recommends buying stocks.
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Monday’s moves came as investors watch developments surrounding the coronavirus outbreak that was first reported in China, but has spread rapidly in other countries especially South Korea and Italy, which reported a spike in the number of confirmed cases in recent days.
South Korea raised its coronavirus alert to the “highest level” over the weekend, with the latest spike in numbers bringing the total infected to more than 750 — making it the country with the most cases outside mainland China.
Meanwhile, outside of Asia, Italy has been the worst affected country so far, with more than 130 reported cases and three deaths.
“There remains a large degree of uncertainty surrounding the virus, and no one knows how this will ultimately play out,” said Keith Lerner, chief market strategist at Truist/SunTrust Advisory. “With stock prices and valuations still near cycle highs, the risk of a worsening virus outbreak has not been priced into the market to a great extent.”
The major averages hit record highs all hit record highs earlier this month despite lingering concerns over the coronavirus.
In the earlier days after the outbreak, many economists had predicted a V-shaped recovery, which describes downturns that see a steep fall before recovering sharply. However, traders are loading up on traditional safe havens such as U.S. Treasurys and gold.
The benchmark 10-year note yield fell to 1.397% on Monday, putting the key rate close to it all-time low around 1.36%. Yields move inversely to prices. Gold futures jumped 1.8% to around $1,679 per ounce and hit its highest level since January 2013.
“Simply put, the markets were not setup for where we are today,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, in a note. It’s an “extremely dynamic environment. And one which continues to warrant respect and caution.”
— CNBC’s Fred Imbert contributed to this report.
