U.S. Stocks Plunge as Coronavirus Crisis Spreads

As outbreaks spread outside China, spiking in Italy and South Korea, investors are growing increasingly concerned about a global economic slowdown.

Investors in the United States have mostly shrugged off the impact of the coronavirus ravaging China. That changed on Monday, when news of the outbreak’s spread drove them to sell stocks — at a furious pace.

The S&P 500 index, which had reached a record high as recently as Wednesday, fell 3.4 percent, its worst single-day performance since February 2018. As analysts issued new warnings that the outbreak could drag down economies around the globe, stocks fell enough to wipe out all of the index’s gains for 2020.

It was a turbulent day for stocks worldwide: European markets recorded their worst session since 2016, and major benchmarks in Asia also closed down.

“There was a cavalier attitude about the virus,” said Bruce Bittles, chief investment strategist at Baird, an investment banking and money-management firm. With the threats appearing to increase, he added, “you have to think about the global economy slipping enough to cause a shortfall in earnings.”

On Monday, fears were rising that the outbreak could spread further into Asia and Europe.

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Credit...Matteo Corner/EPA, via Shutterstock

Italy reported it had 219 cases and locked down 11 towns, restricting the movements of 50,000 people. Police and military forces were deployed to ensure that only people with special permission left or entered towns covered by the order. Officials in Lyon, France, stopped a bus from Milan on Monday and confined the passengers inside over suspicions of a case onboard, the newspaper Le Parisien reported.

South Korea, a major industrial center, reported 231 new cases a day after its government said it was prepared to use emergency powers if necessary. And state-owned media in Iran reported that the virus had killed 12 people there — the highest death toll outside China.

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In the United States, the Centers for Disease Control and Prevention said there were 53 people infected with the virus, up from 34 on Friday. Nearly all the new infections involve former passengers on the Diamond Princess cruise ship docked in Japan, who have been quarantined on military bases in California and Texas. British officials announced that four passengers who had been in quarantine since returning to the country were infected, raising that country’s number of cases to 13.

Not all the news was bad. China may be getting the outbreak under control, the World Health Organization said. Health officials said the daily tally of new infections had been declining since Feb. 2 because of the lockdown around Wuhan, the city at the center of the outbreak. The Chinese government and businesses have begun chartering trains, buses and airplanes to retrieve workers who were stranded by travel restrictions put in place during the Lunar New Year holiday.

“We’re encouraged by the continued decline in cases in China,” said Dr. Tedros Adhanom Ghebreyesus, the organization’s director general. Still, he cautioned that the outbreak could worsen.

“Does this virus have pandemic potential?” he said. “Absolutely it has.”

New pessimistic forecasts about the economy began to emerge last week.

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Credit...John Taggart for The New York Times

In a note published on Friday, economists at JPMorgan Chase wrote that they expected global growth to slow to a 1 percent annual pace in the first quarter, which would be the weakest quarter of the economic expansion that began after the deep recession that started 12 years ago.

In the United States, the consensus estimate for first-quarter domestic growth has slipped to 1.5 percent, according to data from FactSet on Monday, from 1.7 percent at the end of 2019. Economists at Goldman Sachs, who were expecting first-quarter domestic growth of 2 percent as recently as late January, have been steadily lowering their estimate, which fell to 1.2 percent on Sunday. “The risks are clearly skewed to the downside until the outbreak is contained,” they wrote.

Airline and technology stocks were particularly hard hit on Monday. Delta Air Lines shares fell 6.3 percent and American Airlines slid 8.5 percent, while Apple stock fell 4.8 percent. The tech-heavy Nasdaq composite index dropped 3.7 percent.

The sell-off continued in Asia on Tuesday morning, starting in Japan: The Nikkei 225 fell about 4 percent after the start of trading in Tokyo.

Oil prices dropped, with a barrel of West Texas Intermediate crude slipping nearly 4 percent to roughly $51, a result of the reduced demand from idled factories and restricted travel.

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Credit...John Taggart for The New York Times

Investors rushed to safety: Gold — viewed as a haven during market tumult — rose to a seven-year high. It’s up nearly 10 percent since the start of 2020.

And money poured into government bonds, pushing down bond yields, which move in the opposite direction of prices. The yield on the 10-year Treasury note fell to 1.37 percent, near the record low closing of 1.36, a level touched back in July 2016. The yield on the 30-year bond is already in record-low territory at 1.83 percent.

Falling yields can buttress the stock market if they reflect increased expectations for Federal Reserve rate cuts. But a similar decline might also be bad news if it is a result of broad-based expectations that growth will weaken. The difference between the two is a matter of interpretation. But the sharp decline in recent days seems to have pushed investors toward the latter view.

  • Frequently Asked Questions and Advice

    Updated June 16, 2020

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • Will protests set off a second viral wave of coronavirus?

      Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.

    • My state is reopening. Is it safe to go out?

      States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


“It’s that shift in the narrative that is forcing equity investors to have to wake up from the complacent stupor that they’ve been in,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

Officials at the Federal Reserve and within the Trump administration are watching the situation closely, although the central bank’s main tool for stoking growth — lowering interest rates — might not help much if factories are not producing goods and supply chains are disrupted by quarantines.

Central bank officials have been clear that they did not expect to cut interest rates again unless rising risks upend their outlook for stable growth. So far, they have cautiously suggested there was no need to sound any alarms.

But that was before the spike in infections outside China over the weekend.

“The odds of Fed cuts are growing a lot,” Roberto Perli at Cornerstone Macro wrote in a note Monday. “But we need to understand that monetary policy is not well equipped to help in the situation we are facing.”

Like the Fed, the White House has been cautious in declaring the disease a major source of concern. Tomas Philipson, acting chairman of the White House Council of Economic Advisers, said at the National Association for Business Economists conference in Washington that it was too early to tell how significant the effects of the virus will be.

“We don’t know yet, we’re sort of taking a wait-and-see approach,” he said, also noting that the scale of the seasonal influenza is much more significant and that “in terms of the public health impact on the economy, I think that’s been exaggerated.”