Stocks slumped and bond prices soared for the second day in a row as fears spread that the widening virus outbreak will put the brakes on the global economy.
The losses came a day after the market's biggest drop in two years. Investors plowed money into bonds, sending the yield on the 10-year Treasury to a record low. Mastercard joined a growing list of companies warning that the outbreak would hurt its finances.
The Dow Jones Industrial Average fell 878 points, or 3.1%, to 27,081. The S&P 500 fell 97 points, or 3%, to 3,128. The Nasdaq lost 255 points, or 2.8%, to 8,965. The Associated Press reported travel-related stocks took another hit which brought the two-day loss for American Airlines to 16.8%. The new coronavirus has created a worst-case scenario for the last few weeks as it cripples supply chains as well as the global economy.
Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said “It’s the combination of South Korea, Japan, Italy and even Iran” who are all reporting cases of the virus. Ma was quoted in the Associated Press as saying, “That really woke up the market, that these four places in different places around the globe can go from low concern to high concern in a matter of days and that we could potentially wake up a week from now and it could be five to 10 additional places.”
CNN reports that as the World Health Organization says to prepare for a pandemic, the virus has spread to the Middle East and more than 2,700 cases of COVID-19 have been reported worldwide. The UK sent a warning against "all but essential" travel to 11 Italian towns.
Adam Phillips, director of portfolio strategy at EP Wealth Advisors was quoted on CNN saying, "This is not the beginning of a bear market but it could be the start of a correction." Phillips said, "The coronavirus continues to spread and containment remains an issue."
Investors are reportedly running for cover as worries mount that stocks will not bounce back quickly.
