U.S. stocks closed with the Dow Jones Industrial Average registering its worst two day loss on record Tuesday, after the Centers for Disease Control and Prevention warned Americans to prepare for a coronavirus outbreak and investors attempted to assess the impact of the epidemic in China on global trade and travel.
Global stocks were hammered Monday too, as investors feared disruptions to manufacturing supply lines with factories in China still struggling to re-open after quarantines were imposed on several cities in an attempt to contain the epidemic.
What are major indexes doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.62% slid 879.44 points, 3.2%, to settle at 27,081.3, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.36% lost 97.68 points, 3%, to close at 3,128.21. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.35% fell below 9,000, shedding 255.67 points, or 2.8%, to end at 8,965.61.
On Monday, the Dow shed 1,031.60 points, or 3.6%, to settle at 27,960.80, while the S&P 500 slumped 111.86 points, or 3.4%, to close at 3,225.89 — the biggest one-day percentage falls for both indexes since Feb. 8, 2018. The Nasdaq Composite dropped 355.31 points, or 3.7%, to finish at 9,221.28, its biggest one-day drop since December 2018.
The Dow has now seen its largest two day percentage decline since February 5, 2018 while the S&P 500 index saw its largest two day percentage decline since August 24, 2015. The Nasdaq Composite registered its largest two day percentage fall since June 27, 2016.
What’s driving the market?
Investors fear supply line disruptions may hit technology companies dependent on Chinese and South Korean factories in particular. Apple Inc . /zigman2/quotes/202934861/composite AAPL +0.67% and Facebook Inc . /zigman2/quotes/205064656/composite FB -0.85% have now fallen more than 10% from record highs seen last month.
“I think we’re in one of those spirals,” Jennifer Ellison, principal at B|O|S in San Francisco, told MarketWatch. “Obviously, the story is about the spread of the coronavirus that’s spooked investors. Investors don’t know how bad it will get.”
The number of worldwide cases of COVID-19 continues to rise. There are now 80,238 cases in 34 countries and at least 2,700 deaths, according to the World Health Organization (WHO). South Korea raised its coronavirus alert to the “highest level,” with the latest spike in numbers bringing the total infected to more than 800. Meanwhile, Italy has been the worst affected country outside of Asia, with more than 130 reported cases and seven deaths. Iran also confirmed 12 deaths.
Officials for the Centers for Disease Control and Prevention warned Americans on Tuesday that the outbreak “might be bad,” and that Americans should prepare for the possibility of disruptions, even though the current threat to the U.S. remains low.
The U.S. Department of Health & Human Services called for $2.5 billion of additional federal funds to help combat the coronavirus, including to stockpile surgical masks and to work on a potential vaccine, which government agencies said likely wouldn’t be available to the public for another 12 to 18 months.
Meanwhile, two indexes that track transportation and technology slipped into correction territory. The Dow Jones Transportation Average /zigman2/quotes/210598063/realtime DJT +0.75% shed 4.3% to close in correction territory at 10,061.4, as did the S&P 500 Information Technology Sector Index /zigman2/quotes/210600213/delayed XX:SP500.45 +0.22% , which slumped 3.2% to settle at 1,617.18, according to Dow Jones Market Data.
“I think people should be as calm as possible,” said Larry Kudlow, President Donald Trump’s top economic advisor, in a CNBC interview Tuesday, while stressing that, so far, the U.S. has been able to contain the coronavirus. “On the economic side, there is no tragedy in the U.S.,” he said. “Elsewhere it is a human disaster.”