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Why the coronavirus gave investors their excuse to sell

Though there have already been some major geopolitical risks his year — escalating tensions with Iran and the Trump impeachment trial, for example — intensifying fears of the coronavirus have spooked investors the most. This triggered a massive market selloff that resulted in the Dow, S&P 500 and Nasdaq having their worst January since 2016.

Originating in the Chinese city of Wuhan, the novel Coronavirus outbreak has killed at least 490 people and infected close to 24,000 globally as it continues to spread beyond China. The contagion has caused companies like Apple and Tesla to temporarily shut down their factories in China and major airliners, such as American Airlines, Delta Airlines and British Airways, to suspended all flights to and from China with the objective of containing the virus.

Managing Director at Lynn and Associates, Ira Epstein, said how the market fares going forward will depend on whether the coronavirus numbers are worse or better than expected. “If it's way more than that, the market will be very nervous. If it's under that, the market is looking for a crest.”

Despite the major selloff ending the month, Epstein isn’t worried about how the virus will impact the markets for the remainder of the year. “We're sort of setting up the first quarter results going to be a low bar. I'm guessing that as we get into the second quarter of the year, we're going to be in a better place.” 

However, some investors are concerned that this sell-off was independent of the coronavirus, citing that the market was climbing too high and a recession is on the horizon. Epstein doesn’t see it that way. “So there is something to worry about, maybe, in 2021, but I don't see that right now. I think [Friday was] panic off of coronavirus.”

For Epstein, it’s all a matter of perspective. “It’s just a virus,” and at the end of the day, “It's not wiping out mankind.”

Ralph Rezza is a production assistant at Yahoo Finance. Follow him on Twitter at @rrezza2

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