By Nikhila Natarajan
New York, Feb 28 (SocialNews.XYZ) Panicky investors fearing earnings downgrades dumped stocks and major stock indices tumbled to stunning lows as a Wall Street bloodbath unfolded on fears that the coronavirus outbreak will continue its global spread even as big-name companies slashed forecasts and some governments came out with drastic plans to contain the virus.
On Thursday, the Dow Jones Industrial Average, routinely heralded by US President Donald Trump as a spot check on America's economic muscle, plunged 4.4 per cent, totalling a 3,200 point slide this week alone. The S&P 500 and the Nasdaq Composite recorded their biggest one-day declines since August 2011.
All three major US indexes posted their biggest one-day point drops ever.
Money moved from equities to less risky assets and bond proxies like utilities and real estate stocks. These two sector stocks suffered the least losses in Thursday's Wall Street rout.
The Wall Street nosedive came after news broke of a potentially homegrown coronavirus case in California as health experts braced for community spread in the US.
The virus outbreak has now infected more than 82,000 people globally. The US has reported 60 cases, states here are on full alert.
With hopes of a V shaped recovery swiftly fading, Thursday's sell-off came after US reported the latest in a string of 60 cases within the country and America's leading health experts in a special White House briefing said a vaccine is at least a year away.
Goldman Sachs' David Kostin warned that American businesses will generate zero earnings growth in 2020 if the virus becomes widespread. The bank had earlier predicted a 5.5 per cent growth path.
At least two big tech companies - Microsoft and Apple - both have flagged supply chain disruptions and warned that coronavirus would hurt sales this quarter. Tech research firm IDC forecasts shipments of desktops, notebooks and tablets will fall 9 per cent in 2020.
"What's the extended duration of disruption to the supply chain" is the question of the moment, according to Goldman Sachs.
With the virus now infecting people in 47 countries, companies are pressing the brakes on international travel.
Facebook is cancelling F8, its annual conference for developers, scheduled to take place May 5-6 in San Jose, California, while L'Oreal has suspended all business travel for its 80,000 employees until the end of March and Nestle said it would suspend all international business trips for its 290,000 workers until mid-March.
The New York stock market was blanketed by an air of utter anxiety, with traders and analysts following the fine print on coronavirus updates, and readying for sudden shifts.
Nancy Messonnier of the Centers For Disease Control and Prevention, said the question was no longer if the coronavirus will spread across the US but when that will happen.
"Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down", Chris Rupkey, chief financial economist at MUFG Union Bank, was quoted as saying in a research note Thursday.
(Nikhila Natarajan can be contacted at @byniknat)
Source: IANS
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