US markets plummeted for the second straight day Tuesday, adding to Monday’s sharp losses as news about the spread of coronavirus gripped jittery investors.
The Dow finished 879 points, or about 3.2% lower, bringing the index’s total loss over the past four days to about 2,267.
At its lowest point, the Dow was off by 963 points. Tuesday marked its fourth-largest swing from highest point to lowest point in one session.
The Dow is more than 8% below its most recent high, putting it close to correction territory. The Dow would need to fall a total of 10% to officially be in a correction.
The broader S&P 500 closed down 3%, more than 7% below its most recent high. The Nasdaq Composite fell 2.8%. The index is nearly 9% below its latest peak.
“This is not the beginning of a bear market but it could be the start of a correction,” said Adam Phillips, director of portfolio strategy at EP Wealth Advisors. “The coronavirus continues to spread and containment remains an issue.”
It’s a good thing that the market is finally pricing in the risk the virus poses, he added.
“Stocks should not have been at all-time highs because of the impact of the coronavirus,” Phillips said. “The biggest risk is to earnings, and you are starting to see more companies come out and guide expectations lower.”
Economists remain worried about the economic fallout from the virus outbreak, including its effect on global supply chains and trade.
An official of the US Centers for Disease Control and Prevention said Tuesday afternoon that quarantine and travel restrictions have so far proven successful in America, but the CDC ultimately expected the number of US patients to rise.
In a speech at a conference on Tuesday, Federal Reserve Vice Chairman Richard Clarida said that the central bank is closely monitoring the Coronavirus’s spread and its economic impact, adding that it is too early to speculate about its effects in detail. He added that the Fed will respond if anything triggers a material reassessment to the US economic outlook.
News of a sudden increase in cases in Italy and South Korea tanked global markets on Monday, with the Dow plunging more than 1,000 points — something it has only done twice before in history, both times in February 2018.
The CBOE Market Volatility Index, which spiked Monday, was again higher, climbing 12%.
The safe-haven US Treasury bonds again attracted buyers and the 10-year bond yield dropped to a new all-time low below 1.32%.
Gold prices, which rallied at the start of the week, settled lower.
US and global oil benchmarks also fell further on the expectation of lower demand for energy in a coronavirus-inspired economic downturn. US oil futures settled nearly 3% lower at $49.90 a barrel, while the global oil benchmark dropped 2.4% to $54.95 a barrel.