Dow drops 1,000 points as pandemic fears heighten in early trade

Daniel Fowler
February 29, 2020

At 11:17am (ET), the Dow Jones Industrial Average was down 465.60 points, or 1.73 per cent, at 26,491.99, the S&P 500 was down 52.86 points, or 1.70 per cent, at 3,063.53.

Investors continued piling into safe haven investments such as the U.S. Treasury bonds as the benchmark 10-year bond reached a new all-time low yield of 1.17 percent, down 9.5 percent.

Global companies based in the USA have been warning investors that they expect sales in China to plummet and anticipate challenges from supply-chain disruptions as China struggles to get its production back up after the coronavirus devastation and strict quarantines that closed many businesses and kept workers at home.

The Dow Jones Industrial Average opened to steep losses on Friday, as the US stock market's ugly weeklong crash threatened to plunge the Dow into bear market territory.

Virus fears have wiped out almost $3 trillion off the combined market value of companies listed on the S&P 500. The Nasdaq Composite Index was down 414.29 points, or 4.61 percent, to 8,566.48.

The market's losses moderated somewhat after the Federal Reserve released a statement saying it stood ready to help the economy if needed. The benchmark index is still up 4% over the past 12 months, not including dividends. China is still the hardest hit country and has most of the 83,000 cases worldwide and related deaths. Big names like Apple and Budweiser brewer AB InBev are part of a growing list of companies expecting financial pain from the virus.

According to American activist Amy Siskind, the Dow Jones has already entered "correction territory" as a result, and investors are fearing that the coronavirus outbreak could spread in the U.S.

Coronavirus: WHO warns, says situation delicate, disease may reach all countries
Dr Ryan said Iran's outbreak may be worse than realised, with 34 dead, making it the highest number of deaths outside China. Second positive tests have also been reported in China and could imply contracting the disease does not confer immunity.

Fears of a major economic slump sent oil prices to their lowest level in more than a year. But companies were having a far better day Friday, with some on Wall Street believing that the sell-off was overdone.

Tomoaki Shishido, senior economist at Nomura Securities, added: "We don't even need to wait for economic data to see how badly the economy is being hit". Media stocks weathered the downturn pretty well, with most major players seeing declines in the 2%-3% range.

The first case of coronavirus has also been confirmed in Wales.

Hopes the epidemic which started in China at the end of a year ago would be over and global stock markets would return to normal have been shattered as the number of confirmed cases across the world spirals out of control.

"It's not a China thing, it's becoming more global ... in terms of the spread of the virus and its economic impact", said Willie Delwiche, investment strategist at Robert W. Baird in Milwaukee.

Japan will close schools nationwide.

The dollar rose to 108.74 yen from Thursday's 109.58 yen.

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