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Dow stock index tumbles 450 points over coronavirus concerns

New York Stock Exchange
A person wearing a face mask walks past the New York Stock Exchange in New York. World financial markets are reacting to the escalating threat of a widespread outbreak of the coronoaviruis, which has killed at least 80 people in China and infected thousands of others.
(Justin Lane/EPA/Shutterstock)

U.S. stocks fell sharply Monday, sending the Dow Jones industrial average down by more than 450 points, as investors grappled with fresh worries about the spread of a new virus in China that threatens global economic growth.

The selloff gave the Dow its first five-day losing streak since early August and handed the S&P 500 its worst day since early October. Both indexes were off about 1.5%, giving up a significant portion of their gains this month.

The Dow fell 453.93 points, or 1.6%, to 28,535.80. The Dow had been down nearly 550 points. The S&P 500 index dropped 51.84 points, or 1.6%, to 3,243.63. The Nasdaq lost 175.60 points, or 1.9%, to 9,139.31.

The latest bout of selling on Wall Street came after China announced a sharp rise in cases of the virus.

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Airlines, resorts and other companies that rely on travel and tourism suffered steep losses. Gold prices rose as did bonds as traders sought refuge in safer holdings. The yield on the 10-year Treasury fell to 1.60%, its lowest level since October. The market’s broad slide followed a selloff in markets in Europe and Japan.

“Over the weekend you saw more cases,” said Quincy Krosby, chief market strategist at Prudential Financial. “That got investors and traders worried that this may be a longer event. The next question is, ‘What happens to global growth if this does continue and magnify?'“

Chinese health authorities have confirmed 2,750 cases of the virus along with 81 related deaths as authorities extended a weeklong public holiday by an extra three days as a precaution against having the virus spread still further. The virus has spread to a dozen countries, including the U.S. Besides the threat to people’s lives and health, investors are worried about how much damage the virus will do to profits for companies around the world.

Even if they’re thousands of miles away from Wuhan, the interconnected global economy means U.S. companies have plenty of customers and suppliers in China. It’s the world’s second-largest economy, and it accounts for 6% of all revenue for S&P 500 companies over the last 12 months. That’s nearly double any other country besides the United States, according to FactSet.

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“Markets hate uncertainty, and the coronavirus is the ultimate uncertainty in that no one knows how badly it will impact the global economy,” said Alec Young, managing director of global markets research at FTSE Russell.

Resort operators were among the biggest losers in the S&P 500. Wynn Resorts led all companies in the index lower with an 8.1% tumble, while Las Vegas Sands dropped 6.7%. The companies get most of their revenue from the Chinese gambling haven of Macao. MGM Resorts fell 3.9%.

New York Stock Exchange Coronavirus, USA - 27 Jan 2020
Traders work at the opening bell on the floor of the New York Stock Exchange in New York. World financial markets are reacting to the escalating threat of a widespread outbreak of the coronavirus, which has killed at least 80 people in China and infected thousands of others.
(JUSTIN LANE/EPA/REX/Shutterstock)

American Airlines lost 5.5% and Delta dropped 3.4% as part of a broad slide for airlines because of concerns international travel will decline amid the virus’ spread. Booking companies and cruise line operators also were hurt. Expedia Group fell 2.7% and Carnival slid 4.7%.

Chinese companies that trade shares in the U.S. also declined. Search engine operator Baidu fell 2.9% and e-commerce company JD.com dropped 4.8%.

The technology sector, the biggest in the S&P 500, also saw heavy selling. Apple, which relies on China for supplies and sales, fell 2.9%.

Utilities, real estate stocks and household goods makers held up better than the rest of the market, though they still finished in the red. The sectors are viewed as less risky and are not as affected by international issues and developments.

A few companies managed to climb against the sliding markets. Bleach and cleaning products maker Clorox rose 1.1%.

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Investors are also dealing with a heavy week of corporate earnings. Apple will report financial results on Tuesday. Pharmaceutical giant Pfizer and Starbucks will also report.

Boeing, McDonald’s, Coca-Cola and Amazon are also among some of the biggest names reporting earnings throughout the week that includes 147 S&P 500 companies.

Benchmark crude oil fell $1.05 to settle at $53.14 a barrel. Brent crude oil, the international standard, dropped $1.37 to close at $59.32 a barrel.

Gold rose $5.50 to $1,577.40 per ounce and silver fell 6 cents to $18.06 per ounce.

The dollar fell to 108.92 Japanese yen from 109.24 yen on Friday. The euro weakened to $1.1020 from $1.1029.


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