Stock prices are falling faster and harder than they ever have before. If the financial markets are in this much chaos even though not a single American has died from the coronavirus yet, what are things going to look like if this outbreak starts sweeping across America like wildfire?
The number of confirmed cases continues to explode all over the world, and the discovery of a case of “unknown origin” in northern California has really shaken up global financial markets. It has become clear that efforts to contain this virus have failed, and investors are now coming to grips with the fact that this crisis is just getting started. We haven’t seen this much panic on Wall Street in a very long time, and on Thursday we actually witnessed the largest single day point decline in all of U.S. history…
Rising anxiety over the global coronavirus outbreak pushed the stock market into a new zone of fear Thursday.
After falling sharply all week, the Dow Jones industrial average tumbled 1,190.95 points to close at 25,766.64 – its worst one-day point drop in history.
Overall, this is turning out to be an absolutely disastrous week for stocks.
The Dow fell more than 1,000 points on Monday, it fell another 879 points on Tuesday, and stock prices continued to drop on Wednesday.
But hardly anyone expected a brand new all-time record to be set on Thursday, and now we will wait to see what happens on Friday (down another 1,000 at 10:30 a.m. EST – Ed.).
Incredibly, the S&P 500 has already plunged into correction territory. It only took six trading sessions for that to happen, and that is also a brand new record…
Six days. That’s all the time it took for the S&P 500 to fall more than 10% from a record into a correction.
That’s the quickest turnaround of the sort ever, according to data from Deutsche Bank Global Research.
We have never seen anything like this, and many are now wondering what is going to happen if this outbreak gets much, much worse.
Without a doubt, stocks could potentially fall a long, long way. Thanks to a tremendous rally earlier this year, stock prices were pushed to the most overvalued levels that we have ever seen. It was inevitable that prices would fall, and this coronavirus outbreak looks like it could greatly accelerate that process.
Meanwhile, analysts are increasingly coming to the realization that this virus is going to have very serious implications for the entire global economy.
For example, on Thursday David Kostin of Goldman Sachs warned that American companies “will generate no earnings growth in 2020”…
“US companies will generate no earnings growth in 2020,” Goldman’s chief U.S. equity strategist, David Kostin, said in a note to clients Thursday. “We have updated our earnings model to incorporate the likelihood that the virus becomes widespread.”
And Guggenheim’s Scott Minerd is even more pessimistic…
Guggenheim’s Scott Minerd says the coronavirus crisis is possibly the worst thing he’s ever seen in his career: “This has the potential to reel into something extremely serious”
This virus is spreading great fear all over the planet, and it is going to be exceedingly difficult for the world economy to function normally when people are afraid to even leave their own homes.
At this point, the travel industry is being hit particularly hard…
“We don’t even need to wait for economic data to see how badly the economy is being hit. You can tell that the sales of airlines and hotels are already falling by a half or something like that,” said Tomoaki Shishido, senior economist at Nomura Securities.
Up until recently, Wall Street had been acting as if this was a temporary problem that would soon fade.