IE 11 is not supported. For an optimal experience visit our site on another browser.

Dow plummets 600 points in worst day since August, as coronavirus fears grow

Wall Street's infamous fear gauge, the CBOE Volatility Index, rose by 37 percent this month.
The coronavirus, first discovered in the Chinese city of Wuhan, has now spread to at least 18 other countries and dampened sentiment over global economic growth. Spencer Platt / Getty Images file
/ Source:

Stocks fell sharply on Friday, wiping out the Dow Jones Industrial Average’s gain for January, as investors grew increasingly worried about the potential economic impact of China’s fast-spreading coronavirus.

The Dow dropped 610 points, or 2.1 percent, in the 30-stock average’s worst day since August. The S&P 500 was down 1.8 percent while the Nasdaq Composite dropped 1.6 percent.

China’s National Health Commission confirmed on Friday that there have been 9,692 confirmed cases of the coronavirus, with 213 deaths.

On Friday, the U.S. declared the coronavirus a public health emergency within the country. Delta and American suspended all flights between China and the U.S. United Airlines announced similar measures later in the day.

The World Health Organization recognized the deadly pneumonia-like virus as a global health emergency on Thursday, citing concern that the outbreak continues to spread to other countries with weaker health systems. WHO’s designation was made to help the United Nations health agency mobilize financial and political support to contain the outbreak.

The virus, which was first discovered in the Chinese city of Wuhan, has now spread to at least 18 other countries and has dampened sentiment over global economic growth.

“The outbreak of the coronavirus has added another headwind to the near-term outlook for stocks,” Peter Berezin, chief global strategist at BCA Research, said in a note. “Viruses often become less lethal as they mutate because a virus that kills its host is also a virus that kills itself. Unfortunately, in a world of mass travel, a virus can spread across the globe before it has time to lose potency.”

Las Vegas Sands and Wynn Resorts, two stocks that are coronavirus proxies, given their gaming exposure in China, fell more than 1.5 percent each. Airline stocks such as American and United dropped more than 2.5 percent each, while Delta slid 2 percent.

The major averages saw an uptick in volatility this month as investors grappled with rising tensions between Iran and the U.S., trade worries with China and the coronavirus scare.

The Cboe Volatility Index, or fear gauge, rose to above 19 this month from 13.78, a gain of 37 percent.