U.S. stocks were sharply lower Monday as fears over the spread of a deadly outbreak of coronavirus rattled investors.
The Dow Jones industrial average dropped 435 points. The Standard & Poor’s 500 slid 1.5% and the technology-heavy Nasdaq Composite shed 1.8%.
Investor fears grew overnight on the potential economic fallout from the outbreak. The death toll in China has climbed to 81, according to Chinese officials. The National Health Commission said more than 2,700 people are infected. More than 40 of those cases have been confirmed in a dozen other countries, including five in the U.S.
The latest developments sent stocks tumbling overnight, with Japan’s Nikkei 225 losing 2%. Most markets in Asia were closed for the Lunar New Year. The pan-European Stoxx 600 fell 2.3% while Germany’s DAX slumped 2.7%.
“The coronavirus is the number one threat to financial markets currently as global investors are becoming jittery on the uncertainty,” Nigel Green, chief executive and founder of financial consultancy deVere Group, said in a note.
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Travel-related stocks including Carnival Expedia and Marriott International each dropped at least 4%.
While travel and retail stocks will likely come under further pressure, most investors who have a diversified portfolio should still avoid knee-jerk reactions to the latest coronavirus news, he cautioned.
“History teaches us that most issues of this kind have a short-term impact on stock markets,” Green says.
Investors have shifted money to safe-haven corners of the market like high-dividend paying stocks, the Japanese yen and government bonds.
The yield on the benchmark U.S. 10-year Treasury note fell to 1.61%. The dollar fell to 108.94 Japanese yen.
Oil prices fell, weighing on energy stocks. U.S. crude dropped 2.5% to $52.85 per barrel. Brent crude, the international benchmark, slid 2.7% to $59.04 a barrel.