U.S. markets and stock ETFs retreated Thursday on growing fears that the coronavirus outbreak could be more contagious than previously believed.
On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) decreased 0.9%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.4% and SPDR S&P 500 ETF (NYSEArca: SPY) dropped 0.4%.
The broad markets declined sharply in early morning trading and remained depressed throughout Thursday after a Global Times report revealed a central Beijing hospital had showed 36 new cases, fueling fears of a spreading contagion in China’s capital, Reuters reports.
“The story suggests that the virus has spread to medical workers and people who help clean hospitals, so the markets are shook up by that,” Keith Bliss, senior vice-president at Cuttone & Co, told Reuters.
Concerns over the novel coronavirus COVID-19 were already rising after Japan reported two new deaths and South Korea also announced a rise in new viral infections. Research also indicated that the virus was spreading faster than previously anticipated.
“The market got well ahead of itself. The coronavirus thing is not over by any stretch,” Ken Polcari, senior market strategist at SlateStone Wealth LLC, told Reuters.
U.S. equities have been rallying to new record highs after a string of positive news, including China’s new stimulus measures to support a weakening economy, better-than-expected fourth quarter earnings and hopes that the coronavirus’ impact on the global economy would be short lived. However, people are beginning to take a second look.
“People are saying, ‘Wait a minute, is China going to get back to business as quickly as we thought?’” David Lafferty, chief market strategist at Natixis Investment Managers, told the Wall Street Journal.
More market observers are beginning to temper 2020 expectations by the potential economic drag by the coronavirus outbreak. For example, Procter & Gamble warned that the outbreak will have a material impact on sales and earnings for the quarter due to reduced store traffic in China and disruptions to the supply chain. The P&G announcement followed a similar statement from Apple earlier this week.
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