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China coronavirus fears give Dow Jones, Nasdaq, and S&P 500 their worst drop in weeks

China coronavirus fears give Dow Jones, Nasdaq, and S&P 500 their worst drop in weeks
[Photo: Spencer Platt/Getty Images]

Stock prices fell today as the death toll and the number of people infected with a new coronavirus continue to climb. The virus originated in Wuhan, China, and, at last check, at least 110 people are under watch in the U.S.

The Dow Jones dropped 418 points, the S&P 500 lost 48 points, and the Nasdaq 166 points in Monday trading. As MarketWatch reported, this is a steep drop. “For the Dow, the daily decline would represent its worst since Oct. 2, the steepest percentage slide for the S&P 500 since Oct. 8, and the sharpest plunge for the Nasdaq Composite since Aug. 23, according to Dow Jones Market Data.”

So why have the prices been tanking when they resisted (or rose) during news of Iran’s missile attack on U.S. forces in Iraq and the continued news of the impeachment hearings? Several factors are in play.

First, the timing of the outbreak couldn’t be worse as it falls during Chinese Lunar New Year, and this has seriously curtailed travel in and around China. As the New York Times reports:

“The sheer size of the Chinese economy, the second-largest in the world after that of the United States, makes any upheaval there a serious factor in the pace of global economic growth. Creeping doubts among investors have already helped drive down bond yields in recent weeks. And on Monday, the yield on the 10-year Treasury note, considered a gauge of investor expectations for economic growth and inflation, sank to 1.60 percent, the lowest level of the year.”

On a related note, some of the big-name stocks that fell are dependent on Chinese consumers and manufacturing. In a report on CNBC, an analyst from JPMorgan pointed out that Apple has “significant reliance” on Chinese manufacturing, while Qualcomm and Corning will both be hit by a decline in consumer demand.

The same CNBC report indicated that oil prices fell for the fifth straight day because of weakened demand.

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