As the number of confirmed cases of the novel coronavirus continue to spike, the markets have tanked sinking the Dow Jones Industrial Average by more than 1,000 points, Monday.
Dow Jones is a stock market index that measures the performance of 30 large companies listed in the United States stock market.
Inflation fears continue to arise in Wall Street as the Dow closed 1,032 points or 3.6% lower making its worst single-day drop in two years and closed down more than 1,000 points twice in a week.
The S&P 500(SPX) also fell sharply going down by 3.4%, and the Nasdaq composite falling by 3.7% on the same day. VIX, which measures market volatility shot up to more than 46%.
Per ABC, among the worst performers affecting the plummeting of Dow are United Health, Cisco, Visa, American Express, Walgreens and Apple which stocks fell by more than 4%.
On Monday, as reports of the worldwide death toll of COVID-19 rose up to 2,612 with the majority of deaths still recorded in mainland China, the Dow immediately plummeted to more than 900 points.
Meanwhile, outside China, there have also been reports of the virus spreading rapidly in Japan, South Korea, which is now the country with the largest number of infections outside China, and Italy where the cases are most dense outside Asia.
According to CNN, senior market strategist for LPL Financial Ryan Detrick said that even if the spread of the virus is slowing down in China where it was first observed, the huge rise in cases in other countries are affecting 2020 growth estimates.
He further added that the International Monetary Fund has already lowered China's growth since the outbreak started, but if the virus continues to invade other parts of the globe then we would quickly witness a decrease in earnings and growth outlooks.
According to experts, the volatility of the market reactions shows the uncertainty that is still surrounding the COVID-19 outbreak which first emerged in Wuhan City, Hubei Province, China.
In a statement by Charley Ripley, a senior investment strategist of Allianz Investment Management, he said that markets have renewed fears over the potential economic impact of the coronavirus outbreak as it shifts into being more like a pandemic jumping across continents.
He also said that with the interruptions to business and supply chains are being more imminent. Huge companies like Apple have already issued warnings to their investors of the setback caused by the rampant spread of the virus. In addition, he said that the transportation industry has been hugely affected since travelers have canceled flights, hotels and other arrangements due to lockdown and fear of traveling.
Furthermore, he said that in the past outbreaks that we have experienced, there is relatively quicker recovery. However, this time markets continue to struggle with uncertainty since the timing of the outbreak's peak has harmed both human life and the economy.
On the other hand, demand for assets like US treasuries and gold spiked amid the outbreak.
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