Coronavirus pandemic fears fuel Wall St. correction

For the sixth straight session, Wall St.’s main indexes plummeted on Thursday, with the S&P 500 confirming its fastest correction in history as the rapid global spread of coronavirus intensified worries about economic growth. The S&P 500 finished 12% below its Feb. 19 record close, marking its fastest correction ever in just six trading days.

Wall St. correction over 2019-nCoV coronavirusSinéad Carew for Reuters:

The previous record was nine days in early 2018, according to S&P Dow Jones Indices analyst Howard Silverblatt.

The Dow registered a record one-day points drop, which was also its fourth 1,000-point decline in history and the second this week.

All three major U.S. indexes were also on track for their steepest weekly pullback since the global financial crisis, as new infections reported around the world surpassed those in mainland China.

The Dow Jones Industrial Average fell 1,190.95 points, or 4.42%, to 25,766.64, the S&P 500 lost 137.63 points, or 4.42%, to 2,978.76 and the Nasdaq Composite dropped 414.30 points, or 4.61%, to 8,566.48. The Dow ended 12.8% below its Feb. 12 record close and Nasdaq closed 12.7% under its Feb. 19 closing peak.

Microsoft Corp, the biggest drag on the S&P, dropped almost 7% after it warned of weakness in PC business due to a hit to its supply chain from the coronavirus, echoing similar statements from Apple Inc and HP.

MacDailyNews Take: Two quotes regarding this Wall St. correction over the COVID-19 coronavirus:

• People tend to fear the worst. It almost never happens.MacDailyNews, May 14, 2019

• Be fearful when others are greedy. Be greedy when others are fearful. — Warren Buffett

11 Comments

  1. Perhaps. Wouldn’t hurt to stock up on a bit of water and food that will last a week or so because if panic breaks out, you don’t want to be driving around looking for bottles of water.

    In Los Angeles we just had an infected person working at LAX all day, working with people leaving to go to other countries as well as who knows how many local folks. Could get interesting.

  2. This is all overblown. I’m going on a buying spree on the market tomorrow. Let me get this straight, let’s go crazy and say world output of all corporations is down 50% for 2 quarters… and that means companies get a 20% discount on what they produce forever. Irrational but whatever, I’ll take advantage.

    As for the sickness, there are no good stats out there as to how much worse the mortality rate is. I think regular flu “spreads around the world in yearly outbreaks, resulting in about three to five million cases of severe illness and about 290,000 to 650,000 deaths” https://en.wikipedia.org/wiki/Influenza having an overall startlingly high rate. While in stark comparison, the US the rate is about 0.00015 https://www.kff.org/other/state-indicator/influenza-and-pneumonia-death-rate/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.

    So the question is apples to apples, depending on the region, how much higher lower is the rate?

    I don’t think it’s that bad and I think we are seeing the sick media whirl up a panic for clicks, using everything from partisan politics, govt propaganda, to outright fear mongering as a way to make $3.50 more in ad click revenue. The one thing I wish would die is the sick world wide media we are all stuck with.

    Anyway, I’m actually thinking of doing some traveling. Because I hate crowds so the lack of other travelers will be great. And frankly, I’m resigned to getting this stupid flu and just getting over it, so if I happen to get it, I’ll just get past it like every other flu.

    Obviously YMMV and others will have a more nuanced and (and likely rightly have a more) cautious outlook.

  3. The problem will be in the second stage outbreaks and the ability of developing nations (that are a part of the Chinese supply chain) being able to control the spread of the virus.

    In Indonesia (population 270 million+) they have one testing unit for the whole country and would you believe it there are NO infections…hmmm!

    Now my country, Australia (at the moment) has the infection under control but there are no travel restrictions to and from Indonesia.

    If it gets out of control in these areas then the supply chains will break down and we’ll get a short, sharp worldwide recession. If the supply chains don’t break down them it’s a slowdown.

    The Corona virus has a long way to go and when I compared the Australian Prime Minister’s response to the American take on the virus one had me nodding my head in agreement and the other had me rolling my eyes in disbelief. My local doctor (with over 35 years of experience) reckons we’re about a week away from a pandemic being declared. And being in a country where 30 percent of our trade is with China as well as being on the edge of SE Asia I’ve begun to gradually stock up on non perishables, paracetamol, simple surgical masks (and after the bushfires we have a decent stock of P2 masks) etc.

    A piece of advice, the price of protective masks has shot up in price and in Australia and everything is pretty normal except everyone is really nervous. If I were you I’d start stocking up on masks.

    1. I didn’t say there’s a pandemic but what I did say is that we’re not far away from a pandemic. The following might explain the difference.

      OUTBREAK: A sudden rise in cases of a disease in a particular place.

      EPIDEMIC: A large outbreak, one that spreads among a population or region. The current outbreak of a flu-like illness caused by a new virus in China is considered an epidemic.

      PANDEMIC: Generally refers to an epidemic that has spread on a more global scale, affecting large numbers of people. While there are cases of illness outside China, the World Health Organization said it is not a pandemic. Exactly when enough places have enough infections to declare one isn’t a black-and-white decision. But generally, the WHO is looking for sustained outbreaks on different continents.

      https://apnews.com/cc4fdd824f7721827bb48ed51e08901e

    1. You lie. The Democrats are the ones trying to place blame.

      Actual quotes from President Trump, February, February 26, 2020:

      We’ve been working with the Hill very, very carefully, very strongly. And I think we have very good bipartisan spirit for money. We were asking for two and a half billion, and we think that’s a lot, but the Democrats, and, I guess, Senator Schumer wants us to have much more than that. And normally, in life, I’d say, “We’ll take it. We’ll take it.” If they want to give more, we’ll do more. We’re going to spend whatever is appropriate. Hopefully, we’re not going to have to spend so much because we really think we’ve done a great job in keeping it down to a minimum.

      • With respect to the money that’s being negotiated, they can do whatever they want. I mean, again, we’ll do the two and a half. We’re requesting two and a half. Some Republicans would like us to get four, and some Democrats would like us to get eight and a half. And we’ll be satisfied whatever — whatever it is.

      Q: At what point would you be considering loosen the travel restrictions regarding China?

      • You know, we’re not going to loosen the travel restrictions. That’s what saved us.

      Had I not made — Mike alluded to it — had I not made a decision very early on not to take people from a certain area, we wouldn’t be talking this way. We’d be talking about many more people would’ve been infected.

      I took a lot of heat. I mean, some people called me racist because I made a decision so early. And we had never done that as a country before, let alone early. So it was a, you know, bold decision. It turned out to be a good decision.

      But I was criticized by the Democrats. They called me a racist because I made that decision, if you can believe that one.

      We have to all work together. We can’t say bad things, and especially when we have the best team anywhere in the world.

      Q: What is your response to Speaker Pelosi who said earlier today, “You don’t know what you’re talking about,” about the coronavirus?

      • I think Speaker Pelosi is incompetent. She lost the Congress once. I think she’s going to lose it again. She lifted my poll numbers up 10 points. I never thought that I would see that so quickly and so easily.

      I’m leading everybody. We’re doing great. I don’t want to do it that way. It’s almost unfair if you think about it. But I think she’s incompetent, and I think she’s not thinking about the country. And instead of making a statement like that, where I’ve been beating her routinely at everything — instead of making a statement like that, she should be saying we have to work together, because we have a big problem, potentially. And maybe it’s going to be a very little problem. I hope that it’s going to be a very little problem. But we have to work together.

      Instead, she wants to do that — same thing with Cryin’ Chuck Schumer. He goes out and he says, “The President only asked for two and a half billion dollars. He should have eight and a half.” This is the first time I’ve ever been told that we should take more. Usually, it’s we have to take less.

      And we should be working together. He shouldn’t be making statements like that, because it’s so bad for the country. And Nancy Pelosi — I mean, she should go back to her district and clean it up, because it’s the number one — if you look at percentage down, that was one of the finest in the world, and now you look at what’s happening.

      And I’m just saying, we should all be working together. She’s trying to create a panic, and there’s no reason to panic.

      President Trump: Let’s work together. He did not “blame it all on the Democrats.” The only one wrong is you, tweaker.

      Try getting your information from actual reality next time, not MSNBC and CNN.

      1. Dumbass Donald said in a speech that when the warm weather comes in April, the coronavirus will “miraculously” go away. I saw a clip of him saying that – is that reality?

        Anyway, your selective quotes prove nothing except your cognitive bias.

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