There are now 82,549 confirmed cases of covid-19 worldwide, predominantly in China (78,497) and South Korea (1766), and spreading in Italy (528), and the markets have taken notice, spiraling downward on fears of business disruptions across Asia, Europe and the U.S.:
- U.S. markets are crashing. The Dow dropped 2.2%, the S&P 500 2.5%, and the Nasdaq 2.9% this morning, and are showing signs of heading further south. The Dow and S&P 500 have lost 10% since Monday. Market gurus are throwing around the term ‘correction‘, which is typically at least -10%.
- Bank of America says to expect global GDP growth of 2.8%, which would be the worst since the financial crisis, dragged down by coronavirus fears, as well as uncertainty about the U.S. election.
- Goldman Sachs updated its earnings estimate for U.S. companies in 2020 to 0%. Wall Street’s earlier estimates for the year were 7% growth. The update comes due to China’s slow first quarter and rampant supply chain disruptions to U.S. companies, leading Apple, Nike and United Airlines to say they will not meet their earnings targets.
- Europe and Asia markets tumble 2-4%. The Stoxx Europe 600 dropped 4% and the Nikkei 2.1%.
Before you blame the drops entirely on coronavirus, know that many are saying that the market was due for a correction anyway. Still, the outlook is not good. “We have to brace ourselves for wave after wave of earnings downgrades,” Paul O’Connor, Janus Henderson Investors’ head of multiasset, told the Wall Street Journal.