U.S. stock indexes plunged dramatically yet again on Thursday, as the rapid spread of the coronavirus outside China deepens investor worries about growth and corporate earnings.
The Dow Jones Industrial Average plummeted 1,190.95 points, or 4.42 percent, to 25,766.64, the largest one-day point drop in history. It comes during the quickest market plunge on a percentage basis since the financial crisis of October 2008.
The Dow, S&P 500 and Nasdaq all closed more than 10 percent below their recent highs. That means the market is officially in a correction, which is a normal phenomenon that analysts have said was long overdue.
At their heart, stock prices rise and fall with the profits that companies expect to make — and Wall Street’s expectations for profit growth are sinking as more companies warn that the virus outbreak will hit their bottom lines.
Trader Peter Tuchman reacts at the opening bell on the New York Stock Exchange on Thursday as the Dow opens down another 500 points and the market enters correction territory
Adding to worries, the U.S. Centers for Disease Control and Prevention confirmed an infection in California in a person who reportedly did not have relevant travel history or exposure to another known patient.
‘In the recent week, markets have come to realize that the outbreak is much worse and are now realistically pricing in the impact of the virus on the economy,’ said Philip Marey, senior U.S. strategist at Rabobank.
‘In that sense it’s a bit of a catching up from the relative optimism that was there in the beginning when markets thought (the virus) will be contained to China with some minor outbreak outside.’
Rising fears of a pandemic, which U.S. health authorities have warned is likely, have erased about $1.84 trillion off the benchmark S&P 500 this week alone.
Industry analysts and economists continued to sound the alarm as they assessed the impact of the coronavirus, with Goldman Sachs saying U.S. companies will generate no earnings growth in 2020.
Apple and Microsoft, two of the world´s biggest companies, have already said their sales this quarter will feel the economic effects of the virus.
Microsoft’s stock lost 2.8 percent after it told investors that the virus will hurt revenue from its Windows licenses and its Surface devices.
A one-day view of the Dow Jones Industrial Average shows Thursday’s punishing losses
A five-day view of the Dow Jones Industrial Average shows the cumulative declines this week
Traders work during the opening bell at the New York Stock Exchange on Thursday. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent
Budweiser maker AB InBev projects 10% hit to profits in first quarter due to decline in Chinese sales
The world’s largest brewer Anheuser-Busch InBev forecast a 10 percent decline in first-quarter profit on Thursday after the coronavirus outbreak hit beer sales during the Chinese New Year, sending its shares skidding.
The maker of Budweiser, Corona and Stella Artois said the virus had led to a significant decline in demand in China – both at bars and drinking at home, notably during the Chinese New Year.
AB InBev stock plunged on Thursday after the beer maker said that it expected profits to be down 10% for the first quarter due to slumping Chinese sales