US stock markets continue to plunge over coronavirus uncertainty

Posted on: February 28th, 2020 by ABC News No Comments

D-Keine/iStock(NEW YORK) — Markets plunge in worst 1-day drop in history on coronavirus fearsThe Dow dropped over 3,200 points in four days and stocks are down nearly 11%, which means the typical 401K that ended last year has dropped by more than $12,000 in the last few days.

The Dow Jones Industrial Average plummeted more than 800 points on Friday, as financial markets continue to dive on uncertainty over the spread of the novel coronavirus.

The Dow suffered its worst week since the financial crash of 2008.

The S&P 500 and Nasdaq similarly declined Friday, both opening down by approximately 2%. The Dow was down by more than 3%.

Overall, the Dow has lost more than 3,500 points this week.

As markets plunged, Federal Reserve Chair Jerome Powell issued a rare statement Friday, saying they was “closely monitoring” the situation and “will use our tools and act as appropriate” if needed.

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” Powell said. “The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”

Experts and analysts emphasize it is the uncertainty about the outbreak and its full financial impact that is driving the market volatility.

“Ultimately, it is the uncertainty that is most difficult to price in, so people are selling in the advance of concrete information,” Chris Zaccarelli, the chief investment offficer for Independent Advisor Alliance said Friday.

“Based on what we know now, it remains our belief that the impact to the economy will be severe, but not enough to create a recession,” he added.

Mark Hamrick, the senior economic analyst at Bankrate, noted that for long-term investors, “This jolt is a bump in the road that will eventually only be a memory.”

“As with the outbreak, we cannot be confident of the depth or duration of the market’s decline or the economic impacts in the short-term,” he added in a note Friday. “But also similar to the spread of the virus, we know that it will have a conclusion. It will take some time to arrive at that point.”

Hamrick added that, “long-term investors with the ability and fortitude to remain in the market should do just that.”

“This is for certain: One locks in a loss by selling,” he said.

The plunge comes as the U.S. Food and Drug Administration announced it’s been alerted to the first manufacturing shortage of a drug due to a viral coronavirus outbreak that began in China and has now reached American soil.

Officials also warned Americans earlier this week to prepare for community spread of coronavirus in the U.S., and companies have warned investors of supply chain issues related to the outbreak.

Copyright © 2020, ABC Audio. All rights reserved.

Leave a Reply

You must be logged in to post a comment.