Dow sinks more than 600 points as coronavirus fears mount
The U.S. stock market tumbled Friday amid concerns about the toll the coronavirus outbreak could take on global economic growth.
The Dow sank 603 points, or 2.1%, to close at 28,256. The broader S&P 500-stock index dropped 58 points, or 1.8%, to 3,225, and the tech-heavy Nasdaq composite sank 148 points, or 1.6%, to 9,151.
Shares of Apple, which relies on Chinese consumers for sales and Chinese factories for supplies, fell 4.4%. Airlines were also among the biggest losers, with American Airlines sinking 3.2% and Delta Air Lines slipping 2.3% as both companies moved to suspend flights to and from China in the wake of a global emergency declaration Thursday by the World Health Organization.
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The S&P 500 is on track for its second weekly loss and its biggest weekly decline since early August. The benchmark for the U.S. stock market had been off to a solid start for the new year until concerns about the virus stunted it, although it is still on track to eke out a slight gain for January. The Nasdaq is also on track for its second straight weekly loss, though it is still holding on to gains of 2.3% for January, thanks in large part to big high-flyers like Amazon and Tesla driving up the composite.
Forecasters expect the virus to dent global economic growth, including in the U.S. Indeed, economists with Goldman Sachs estimate the epidemic will reduce U.S. growth in the three months of the year year by 0.4 percentage points to around 1.6%, down from a previous forecast of 2% for the period.
Ben May, director of global macro research at Oxford Economics, told investors in a report Friday that "it's increasingly apparent the disease is becoming an economic as well as a public health concern," citing the rising number of infections and deaths.
In China, where the virus is thought to have started, the contagion has killed at least 212 people and infected nearly 10,000. That exceeds the number of cases of Severe Acute Respiratory Syndrome, or SARS, a 2003 coronavirus outbreak that led to 774 deaths.
Oxford predicts the latest coronavirus will reduce China's gross domestic product by 0.4 percentage points this year and crimp global growth by 0.2 percentage points.
China accounts for 16% of the world's GDP and is the central cog in many global supply chains. Economists warn that factory stoppages in parts of the country affected by the virus could result in shortages of auto parts, electronic components and other equipment in other countries.
