Fears that the coronavirus outbreak cannot be contained have led to major losses on Wall Street.
The Dow Jones Industrial Average on Tuesday closed down 3.15% from Monday’s close, which was 3.55% off from its previous close. The S&P 500 and Nasdaq composite closed on Tuesday off by 3.03% and 2.77%, respectively. Both closed lower on Monday, down 3.35% and 3.71%, respectively.
Around the world, the United Kingdom’s Financial Times Stock Exchange 100 Index closed down 1.94% and Germany’s Dax index was down 1.88% at closing.
Tuesday’s sell-off follows Monday’s drop, which was the largest decline in the U.S. markets in two years. The concern is that the virus will cripple supply chains and drag down economic activity beyond the first quarter of 2020. New infections have been reported in South Korea, Austria, and Switzerland. Meanwhile, Health and Human Services Secretary Alex Azar told a Senate panel that the United States cannot be “hermetically sealed off” from the virus.
Nancy Messonnier, director of Centers for Disease Control and Prevention’s National Center for Immunization and Respiratory Diseases, said on Tuesday that her organization expects the virus to spread in the U.S.
“Ultimately, we expect we will see community spread in this country. It’s not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen and how many people in this country,” she said.
Oil prices have slumped for a second day. Estimates are that the virus will reduce the number of barrels purchased per day by anywhere from 250,000 to up to 500,000. The price for crude oil fell 2.5% on Tuesday.
Investors are taking shelter in 10-year U.S. treasury bonds, which are trading at 1.33%, nearly beating its record low of 1.325% in June of 2016. How far Treasury yields fall could depend on how widespread the virus becomes.
