Major U.S. indexes lost roughly 3.5%, wiping out the surge stocks had ridden just a day earlier, which came in part on hopes that moves by authorities around the world could cushion the economic fallout.
Financial markets have been on a roller coaster as investors grapple with the potential economic damage caused by fractured supply chains, travel bans and the disruption of daily life. The viral outbreak that was first identified in Wuhan, China, in December has sickened nearly 98,000 people and claimed at least 3,300 lives so far, spreading around the globe.
The infectious disease is an exogenous factor that economists and investors are finding difficult to model. There is little clarity about how long it will take governments and health officials to contain the virus, leading to a gloomy prognosis for global economic growth.
For that reason, the Federal Reserve cut benchmark interest rates on Tuesday by a half-point to the 1%-to-1.25% range, marking the first time the central bank has conducted an emergency rate cut since the 2008 financial crisis. Market participants are now anticipating another half-point cut at the Fed's scheduled March 18 meeting.
In China, where the number of new infections has been slowing drastically, stocks trading in Shanghai have rallied nearly 12% since hitting a bottom on Feb. 3. Factories there are gradually reopening, and a return to a sense of normal life may even be on the horizon following swift and severe actions by the government to corral the virus. But elsewhere in the world, the mood is darker. There are about 17 times as many new infections outside China as in it, according to the World Health Organization.
At least 206 people have tested positive for COVID-19 in the U.S., and 11 have died, as of Wednesday, according to figures from the Johns Hopkins Whiting School of Engineering's Centers for Systems Science and Engineering. California declared a statewide emergency, and Southwest Airlines warned its investors that it's seen a significant decline in demand in recent days.
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As virus cripples travel demand, the International Air Transport Association flagged a potential $113 billion hit to global airline travel, sending the S&P 1500 Airlines Index down 8.1%. Carrier Southwest issued a revenue warning, while United Airlines and JetBlue Airways cut flights and implemented cost controls.
Cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line Holdings sunk between 14% and 17% as health officials screened people on a ship linked to a person's death in California.
ECONOMIC NEWS: US Factory Orders Pull Back In January- US new orders manufactured goods pulled back by much more than expected in the month of January, according to a report released by the Commerce Department on Thursday. The Commerce Department said factory orders slid by 0.5 percent in January after surging up by 1.9 percent in December. The report said orders for durable goods dipped by 0.2 percent in January after spiking by 2.8 percent in December, with the drop in durable goods orders unchanged from the estimate reported last week. New orders for non-durable goods also slumped by 0.8 percent in January after jumping by 1.1 percent in the previous month. The Commerce Department said shipments of manufactured goods also fell following three consecutive monthly increases, decreasing by 0.5 percent in January after climbing by 0.5 percent in December. Inventories of manufactured goods also edged down by 0.1 percent in January after rising by 0.4 percent in the previous month. With inventories and shipments both falling, the inventories-to-shipments ratio in January was unchanged from December at 1.40.
US Weekly Jobless Claims Edge Down Slightly- The Labor Department released a report on Thursday showing a modest decrease in first-time claims for US unemployment benefits in the week ended February 29th. The report said initial jobless claims edged down to 216,000, a decrease of 3,000 from the previous week's unrevised level of 219,000. Meanwhile, Labor Department said the less volatile four-week moving average crept up to 213,000, an increase of 3,250 from the previous week's unrevised average of 209,750. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also rose by 7,000 to 1.729 million in the week ended February 22nd.
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