In late January, after the novel coronavirus spread across China and into countries, including Australia, Canada, Germany and the United States, global stock markets dropped as anxiety spread among investors. The novel coronavirus is a new strain that ranges from mild cases of fever, coughing and shortness of breath to death. There have been over 28,000 confirmed cases and over 500 deaths linked to the virus.
The Dow Jones Industrial Average, the Standard & Poor’s 500, or S&P 500 and Nasdaq stock indexes fell between 1.6-1.9%, or about a 500 point decrease each. The Dow Jones Industrial Average’s drop of 1.6% was the worst drop since last October and Nasdaq lost 1.9%, making it the worst drop since last August. However, some sectors of S&P 500, such as utilities, were up 5.6% on Jan. 27, according to CNCB.com.
The indexes hold a compilation of stocks and allow investors to track or invest in companies.
“Stock market indexes around the world are powerful indicators for global and country-specific economies,” according to investopedia. “In the United States, the S&P 500, Dow Jones Industrial Average and Nasdaq composite are the three most broadly followed indexes by both the media and investors.”
Many travel companies saw large drops in shares after the coronavirus outbreak, according to Rachel Siegel’s Jan. 27 Washington Post article. Delta Air Lines, Inc., fell 3.4%, and American Airlines’ stock price fell 5.5%. The American casino and resort company, Las Vegas Sands, saw a drop of 6.7% and a China-based company, Luckin Coffee, saw its stock fall 9%. Fear sales even saw Apple drop 4%. Most drops in the market occurred from Jan. 27 to Feb 1.
Roy Franklin, a freshman business management major, is an investor in the stock market and witnessed how the market changed in the last few weeks.
“I thought it was surprising that [the stock market] was dropping at these percentages. It was an unusual drop, but I based some research for stock buying off the event,” Franklin said. “I had [Apple] when the coronavirus was announced and it dropped, but I held it until there was better news. It dropped roughly 4% between Jan. 24-27 and later on it went back up roughly 6.5% from Feb. 3-12.”
In early February, as fears around the coronavirus slowing the global economy lessened, some stocks and indexes recovered from the previous month’s drops.
“The impact the virus could have on Chinese and global growth preoccupied markets last week, but after a mix of positive domestic data and rumors of coronavirus treatment, sentiment reversed this week,” Gwen Everett said in a Feb. 6 Markets Insider article. Everett is a writer for Markets Insider, which provides information and news on the stock market.
Feb. 5 marked the third day straight that stocks rose, pushing some indexes and stocks back to levels prior to the drops due to fear of the coronavirus. S&P 500 closed the stock market day with a jump of 1.5% and the Dow Jones Industrial Average gained 480 points.
Energy, financial and healthcare sectors all saw strong gains. Johnson and Johnson reached a six-month high of 153.99 on Feb. 5. However, Tesla had its second-worst day in stocks ever with a decline of over 17%. Even considering the latest drop, though, Tesla is still up 80% for 2020, according to CNBC.
“There is still uncertainty around the coronavirus, but this doesn’t seem to be the open-ended risk it was last week,” chief market strategist at Natixis Investment Managers Dave Lafferty said in a Feb. 5 CNBC article.
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