Stocks dipped in morning trade amid growing concern that the coronavirus is spreading beyond China.
The Dow fell more than 1,000 points on Monday, with investors spooked after countries including South Korea and Italy reported more cases of the disease this week, including Europe’s first significant cluster of infections in northern Italy.
After rising on Tuesday shortly after markets opened, the Dow fell 126 points, 0.4%, to 27,835. The tech-heavy Nasdaq lost 29 points, or 0.3%, and the S&P 500 declined 17 points, or 0.5% to 3,209. Stocks listed in the S&P 500 lost nearly $965 billion in market value on Monday.
“Global equity markets finally got the memo yesterday that the global economic impact of policy measures to contain China’s coronavirus outbreak will be really, really big,” Carl Weinberg of High Frequency Economics told investors in a note.
South Korea’s roughly 1,000 cases and 10 confirmed deaths pushed the global tally of cases over 80,000 and the death toll closer to 3,000. On Tuesday, Iran also reported more deaths from the disease, amid fears the Islamic clerics who run the country could be under-reporting cases there. Worldwide economic growth could plunge more than $1 trillion if the disease continues to spread and becomes a global pandemic, according to Oxford Economics.
It’s unclear what the long-term impact of the disease could be on global markets, although some analysts suggested any rally could be short-lived given the widening impact on supply chains, with China’s factories struggling to reopen.
“What is becoming clearer by the hour, is the disruption from coronavirus to business globally, in the form of supply chain bottlenecks and falling sales,” wrote Jeffrey Halley, senior market analyst for Asia Pacific at OANDA. “Against that backdrop, any short-term rallies in asset markets, are likely to be just that, short.”
President Donald Trump on Monday tried to tamp down fears about the coronavirus spreading in the U.S., saying in a tweet that the situation is “very much under control in the USA. … Stock Market starting to look very good to me!”
The Trump administration has asked Congress for an additional $2.5 billion to prepare in case of a widespread outbreak and to assist other nations.
