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Stocks tumbled Thursday as fears mount that the deadly coronavirus could be spreading to the U.S. as the number of worldwide cases top 81,000.
The Dow Jones industrial average tumbled 500 points, pushing it into a correction for the first time since December 2018. A correction is generally defined as a decline of 10% from a recent high.
This week’s losses have wiped out the Dow’s gains for the year. Heading into Thursday, the average is down 7% this week, on track for its worst weekly percentage performance since the depths of the financial crisis in 2008.
The Standard and Poor’s 500 dropped 2.2%, also putting the index into a correction after hitting an all-time high on Feb. 19. The Nasdaq, which slumped 2% Thursday, is off 10% from its Feb. 19 all-time high.
President Donald Trump announced late Thursday the U.S. was stepping up its efforts to combat the virus outbreak. Shortly after Trump spoke, the government announced that another person in the U.S. was infected — someone in California who appears not to have the usual risk factors of having traveled abroad or being exposed to another patient.
“The efforts by Trump to calm the markets are being overshadowed by the news from the CDC of a possible transmission of the virus in the U.S.,” Peter Cardillo, chief market economist at Spartan Capital Securities, says in a note. “We continue to recommend staying cautious.”
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Investors have been shifting money from stocks into safe havens like bonds and gold in the wake of the outbreak.
The yield on the 10-year Treasury, a closely watched barometer for the U.S. economy, hit a fresh record low, sliding to 1.27% Thursday, down from 1.34%. The yield on the 3-month Treasury bill edged up to 1.51%. The inversion in the yield between the 10-year and the 3-month Treasurys is a red flag for investors because it has preceded the last seven recessions.
Gold climbed $7.60 to $1,650.70 per ounce.
Germany’s DAX lost 2.2% and the CAC 40 in Paris dropped 2.3%. In London, the FTSE 100 lost 2.5%. Japan’s Nikkei 225 index lost 2.1% while in Australia, the S&P ASX/200 dropped 0.8%. Hong Kong’s climbed 0.3% to 26,778.62.
The Associated Press contributed to this report.
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