U.S. Stocks Plunge as Coronavirus Crisis Spreads

February 24, 2020
Business

Investors have been jumpy since the start of the crisis in January, because of the role that China’s factories play in global business and because the country is a huge consumer market itself. But while analysts have incorporated the virus into their growth forecasts for the United States in recent weeks, they have only whittled around the edges of expectations.

What do you need to know? Start here.

Updated Feb. 10, 2020
- What is a Coronavirus?
  It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
- How contagious is the virus?
  According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
- Where has the virus spread?
  The virus originated in Wuhan, China, and has sickened tens of thousands of people in China and at least two dozen other countries.
- How worried should I be?
  While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
- Who is working to contain the virus?
  World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
- What if I’m traveling?
  The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
- How do I keep myself and others safe?
  Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

The consensus estimate for first quarter growth in the United States has slipped from 1.7 percent at the end of 2019, to 1.5 percent on Monday, according to data from FactSet. 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 Monday.

“The risks are clearly skewed to the downside until the outbreak is contained,” they wrote.

Monday’s drop across markets for stocks, bonds and commodities suggests that investors don’t believe those somewhat muted forecasts are pessimistic enough.

In bond markets, yields tumbled, reflecting a sharp — if perhaps temporary — downgrade of expectations for economic growth and inflation.

The yield on the 10-year Treasury note fell to 1.37 percent in early trading, 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 1.82 percent.

Article source: https://www.nytimes.com/2020/02/24/business/stock-market-coronavirus.html