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Stocks - Dow Turns Negative for 2020 on Virus Threat to Growth

Stock MarketsFeb 24, 2020 01:35PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – A sea of red washed over stocks on Monday, erasing all the Dow's gains for the year, as signs of a peak in coronavirus infections in China were offset by a sharp uptick in infections elsewhere.

The S&P 500 tumbled 3.42%, Nasdaq Composite lost 3.9% and the Dow Jones Industrial Average fell 3.53%, or 1,023 points.

The World Health Organization said the Covid-19 epidemic in China peaked and plateaued between Jan. 23 and Feb. 2, but warned that a "sudden increase in new cases" outside of China is "deeply concerning."

Italy reported more than 220 cases of the virus, with five deaths as of Monday morning. South Korea confirmed 231 cases, taking the total in the country to more than 830. Iran, meanwhile, confirmed 61 total cases, with 12 deaths nationwide.

The spread of the virus beyond China has investors fretting over a potential pandemic, which many fear would roil global growth despite expectations for central banks to cushion the fallout with more easing.

"The U.S. economy will also likely be affected, but based on the current backdrop, recession risk still appears relatively low. The drag will be partially offset by a sharp drop in interest rates and energy prices," Suntrust said in a note to clients.

Against the backdrop of rising worries about a prolonged hit to global supply chains linked to China, and by extension, to the global economy investors ditched stocks and piled into safe-havens like bonds, triggering a further inversion in the bond-market yield curve, a warning signal on the economy.

The spread between the 3-Month note and 10-Year Treasury yield widened to -16 basis points from -10 basis points on Friday.

Semiconductor companies, who look to China for growth, led the broader decline in the tech, with Advanced Micro Devices (NASDAQ:AMD) down 8%, Nvidia (NASDAQ:NVDA) off 7% and Texas Instruments (NASDAQ:TXN) down 5%.

Energy stocks were not too far behind, paced by a slump in oil prices as the spread of the virus stoked further worries about Chinese oil demand.

Consumer discretionary stocks were also on the back foot, as companies such as Starbucks (NASDAQ:SBUX) and Yum! Brands (NYSE:YUM), both of which have recently raised concerns about the impact from the virus on performance, came under pressure.

Elsewhere, Intuit (NASDAQ:INTU) got caught up the broader selloff as it was believed to be nearing a deal to buy Credit Karma, a personal-finance portal, for about $7 billion.

Stocks - Dow Turns Negative for 2020 on Virus Threat to Growth
 

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Comments (4)
Logan Keith
Logan Keith Feb 24, 2020 2:59PM ET
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the market is way overvalued. this us overdue and probably wont correct as much is actually needed/ warranted
Aaron Last Name
Aaron Last Name Feb 24, 2020 2:19PM ET
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don't worry. be happy. the plunge protection team along with Washington will bail out the wallstreet crooks rest assured. everyone else your finished
James Marshall
James Marshall Feb 24, 2020 2:14PM ET
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give thanks to the FED for creating a bubble with their insane injections
Biji Rajaku
Biji Rajaku Feb 24, 2020 1:52PM ET
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What is the real reason for the stock market to be panic in blood bath?
 
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