U.S. stocks slumped for a fifth straight session on Wednesday as investors continued to weigh the fast-spreading coronavirus and its impact on the economy.
Worry about economic fallout from the deadly virus that originated in China fueled a sharp sell-off this week that wiped out the market’s gains for the year.
On Wednesday, the Dow Jones industrial average slumped 124 points to close at 26,957.59, after shedding nearly 2,000 points following steep losses on Monday and Tuesday. The blue-chip average is off 8.8% from its Feb. 12 record, putting it on the brink of a correction, generally defined as a decline of 10% from a recent high.
On Wednesday, the Standard & Poor’s 500 slipped 0.4% to end at 3,116.39. Tuesday marked the first back-to-back 3% losses for the S&P 500 since the summer of 2015. The index is the main benchmark for mutual funds. The Nasdaq Composite was virtually unchanged, ticking up 0.2% to end at 8,980.78.
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In a day of wild swings, the Dow rose about 460 points before tumbling. Jamie Cox, manager of Harris Financial Group, says investors, and computerized trading programs, are reacting to every positive or negative headline about the virus.
“I think we’re probably going to see another leg down before we test the lows,”he says. A relief rally likely will follow, though stocks could head lower again when February economic data begins trickling out in a few weeks.
Investors were spooked this week as more companies, including United Airlines and Mastercard, warned the outbreak of a coronavirus will hurt their finances, and more cases were reported in Europe and the Middle East, far from the epicenter in China. Meanwhile, U.S. health officials called on Americans to be prepared for the disease to spread in the United States, where there are currently just a few dozen cases.
“The market had been too complacent about a virus that continues to spread across continents, and which will have a considerable impact on growth moving forward,” Anthony Saglimbene, global market strategist at Ameriprise Financial, says in a note. “This could lead to more near-term market volatility and pressure stock prices further.”
The viral outbreak that originated in China has now infected more than 80,000 people globally, with more cases being reported in Europe and the Middle East. The majority of cases and deaths remain centered in China, but the rapid spread to other parts of the world has spooked markets and raised fears that it will hurt the global economy.
Energy companies led the selling Wednesday as oil prices declined. Comarex Energy lost 4.9%. Cruise operators including Royal Caribbean and Carnival continued to fall sharply, deeping a rout that began a month ago. Both stocks have lost more than 30% over the past month.
Companies that rely on consumer spending and industrial stocks also fell. Those losses outweighed gains in technology and health care stocks.
The tech sector was among the worst hit by sell-offs this week as many of the companies rely on global sales and supply chains that could be stifled by the spreading outbreak.
The 10-year Treasury, a closely watched barometer for the U.S. economy, slipped to 1.31% Wednesday from 1.33% late Tuesday.
In Europe, France’s CAC 40 edged up 0.1% while Germany’s DAX dipped 0.1%. Britain’s FTSE 100 added 0.4%. Japan’s benchmark Nikkei 225 declined 0.8% and Australia’s S&P/ASX 200 lost 2.3%. Hong Kong’s Hang Seng declined 0.7%.
Paul Davidson and the Associated Press contributed to this article.