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Fear Over Containment of Coronavirus Drives US Stocks Back into Correction Territory

James Hyerczyk

The major U.S. equity markets plunged on Thursday, putting them back into correction territory, but still higher for the week. The sell-off wiped out the optimism coming off Super Tuesday as fear over the containment of the coronavirus regained its grip on the markets. Investors also shrugged off the announcement of emergency funding from Congress and emergency aid from the International Monetary Fund (IMF) and World Bank.

In the cash market on Thursday, the benchmark S&P 500 Index settled at 3021.94, down 106.18 or -3.59%. The blue chip Dow Jones Industrial Average finished at 26121.28, down 969.58 or -3.82% and the technology-based NASDAQ Composite closed at 8738.60, down 279.49 or -3.26%.

US Coronavirus Update

Fears about the coronavirus disrupting the global economy continued to grip Wall Street as countries around the world extended quarantines and travel restrictions, CNBC said. The coronavirus death toll in the United States rose to 11 as the state of California declared an emergency following a coronavirus-related death and 53 confirmed cases in the state. The number of infections in New York also doubled overnight to 22 as the state ramps up its testing.

“The majority of this is just growing concern about the fallout from the virus because it’s spreading,” said Tom Essaye, founder of the Stevens Report. “For every hour, another group of people have it and it’s in another state. People are getting a bit nervous about this constant barrage of headlines.”

Stock-Related News

Technology giants Alphabet Inc., Amazon Inc., and Microsoft Corp. recommended their employees in Seattle work from home.

In response to the virus’ crippling effect on demand, the International Air Transport Association flagged a potential $113 billion hit to global airline travel, sending the S&P 1500 Airlines Index down 8.1%.

In related news, Carrier Southwest issued a revenue warning, while United Airlines and Jet Blue Airways cut flights and implemented cost controls.

Cruise operators Carnival Corp., Royal Caribbean Cruises and Norwegian Cruise Line Holdings sunk between 14% and 17% as health officials screened people on a ship linked to a person’s death in California.

Stock Market Internals

The CBOE Volatility Index, Wall Street’s fear gauge, jumped 8.2 points to 40.14.

All the major S&P sectors were in the red with a 5.3% fall in the interest-rate sensitive financials sector weighing the most.

Declining issues outnumbered advancers for a 6.23-to-1 ratio on the NYSE and for a 4.76-to-1 ratio on the NASDAQ

The S&P 500 Index recorded eight new 52-week highs and 71 new lows, while the NASDAQ recorded 24 new highs and 253 new lows.

This article was originally posted on FX Empire

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