U.S. stock benchmarks on Monday closed sharply, with all three indexes posting their worst daily losses in months, amid growing worries about the economic implications of a rising death tolls and growing infections from a fast-moving virus in China.
How did benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.83% slid 453.93 points, or 1.6%, to 28,535.80, following an intraday nadir at 28,440.47, while those for the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.88% slid 51.84 points, or 1.6%, to 3,243.63, with a Monday low at 3,234.50. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.70% shed 175.60 points, or 1.9%, to reach 9,139.31, after hitting a low at 9,088.04.
For the Dow and S&P 500, the daily decline represented the worst daily drops since Oct. 2, and the sharpest daily decline for the Nasdaq Composite since Aug, 23, according to Dow Jones Market Data.
The Dow has now fallen for five straight days, representing its longest losing streak since August.
Worries about the spread of the China virus drove stocks to their lowest levels in over a week on Friday. Last week, the Dow lost 1.2%, while the S&P 500 gave back 1% and the Nasdaq fell 0.8%.
What’s drove the market?
The coronavirus injected Wall Street investors with fresh worries after China extended this week’s Lunar New Year holiday and took more drastic measures to halt the spread of the illness.
As of Monday, the death count rose to more than 80, and the number of those infected neared 3,000 confirmed cases, according to reports. In the U.S., at least 110 people were identified as under investigation for the virus, according to the Centers for Disease Control and Prevention, while a handful of infections were reported in other countries, such as France and Japan.
Questions were being raised over the effectiveness of the quarantine on places like Wuhan, China, believed to be the epicenter of the virus. U.S. President Donald Trump on Monday offered China “any help” needed to help control a coronavirus outbreak.
Wuhan’s mayor Zhou Xianwang said that 5 million of the city’s 11 million people had left the city before the travel ban was imposed. As well, reports that the virus may be infectious during its roughly 14-day incubation period may make containment more challenging.
Concerns have been growing about the potential impact of the virus on China’s economy, which is set to slow to around 5.7% in 2021 from 6.1% last year, down from its near double-digit growth when the severe acute respiratory syndrome, or SARS, hit in 2002-03, according to data from the International Monetary Fund .
Some analysts make the case that fears over the coronavirus could provide investors with a catalyst to sell after a torrid 2019 rally.
“We’re being told the market is selling off because of the coronavirus. I think there is a little bit more to it than that,” Robert Pavlik, chief market strategist at SlateStone Wealth. “I think it’s people looking for a reason to take some short-term profits,” he told MarketWatch. “I think this is going to turn out to be an overreaction.”