By Mark DeCambre, MarketWatch
The U.S. stock-market rally has unraveled, with a period of historic gains coming to a screeching halt, as fear that the coronavirus epidemic may reach America rattles Wall Street.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +3.15% fell into correction on Thursday, widely defined as a drop of at least 10%, but no more than 20%, from a recent peak. The S&P 500 index and the Nasdaq Composite indexes all joined the blue chips in correction territory.
However, it is the speed at which the indexes fell into these conditions that has surprised investors and some experts on Wall Street. It was the fastest decline into correction for the Dow, 10 sessions, since the nine-session slump into correction on Feb. 8, 2018.
|Corrections from a Record Close|
|Record Close||Enters Correction Date||Trading days|
|Nov. 3, 1919||Nov. 12, 1919||7|
|Nov. 28, 1928||Dec. 8, 1928||8|
|Jan. 26, 2018||Feb. 8, 2018||9|
|Feb. 12, 2020||Feb. 27, 2020||10|
|Sept. 23, 1955||Oct. 11, 1955||12|
For both the S&P 500 /zigman2/quotes/210599714/realtime SPX +2.62% and the Nasdaq /zigman2/quotes/210598365/realtime COMP +2.06% it was the fastest retreat on record from a record high, six sessions ago, to correction.
Thursday’s declines also put all three equity indexes on pace for their worst weeks since the 2008 financial crisis.
Here’s are 5 reasons that the market is falling:
COVID-19 infects confidence
Fear of the COVID-19 disease infecting the U.S. is intensifying. The illness derived from the novel coronavirus, SARS-COV-2, which originated in Wuhan, China, late last year, is starting to affect global trade and travel and taking a bite out of confidence about earnings and economic growth.
Seven days ago, Goldman Sachs chief global equity strategist Peter Oppenheimer told clients that “in the nearer term…we believe the greater risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the risks of a correction are high.”
Goldman made a similar call on Thursday, this time from strategist David Kostin, saying there would be no earnings growth in 2020.
Risks have intensified since Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases at the Centers for Disease Control and Prevention, said on Tuesday that “the disruption of daily life might be severe.”
President Donald Trump’s coronavirus news conference on Wednesday failed to provide investors with much comfort, mostly because it is difficult to predict how the virus will play out here and elsewhere.
The World Health Organization hasn’t declared the viral infection a pandemic, but the disease, from the family of viruses known as SARS, or severe acute respiratory syndrome, has sickened people in China, South Korea, Japan, Malaysia, Italy and Iran. And according to Reuters , Austria, Spain, Croatia and Switzerland have also confirmed their first cases.
The virus has virtually crippled swaths of manufacturing in China, the world’s second-largest economy, and the country is a big buyer of products and services from other countries. U.S. technology companies such as Apple Inc. /zigman2/quotes/202934861/composite AAPL +2.85% depend on Chinese supplies.