US Market plunges as coronavirus pandemic fears loom

The US equity market finished lower for sixth straight session on Thursday, 27 February 2020, as investors fret about the global spread of the coronavirus epidemic and uncertainty about the economic impact. At closing bell, the Dow Jones Industrial Average lost 1,190.90 points, or 4.42%, to 25,766.60, while the S&P 500 shed 137.63 points, or 4.42%, to 2,978.76. The Nasdaq Composite slumped 414.29 points, or 4.61%, to 8,566.48. The Dow was now down 9.71% for the year, while the S&P 500 was off 7.80% year-to-date, and the Nasdaq has lost 4.53%.

The falls in US market came as intense fears about a slowdown in global growth caused by the rapid global spread of deadly coronavirus and to disrupt global trade. Most new virus cases are now being reported outside China - the origin of the outbreak - with South Korea, Italy, Japan, and Iran emerging as new epicentres.

 

Investor sentiment took another hit when California's governor said 8,400 people were being monitored after travelling to China. Meanwhile, the US Centres 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.

The number of confirmed coronavirus cases outside of China has also jumped. In South Korea, more than 1,700 cases have been confirmed along with over 600 in Italy. The outbreak has the potential to become a pandemic and is at a decisive stage, the head of the World Health Organization said Thursday.

In economic data: Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 219,000 for the week ended Feb. 22, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported. The economy created 225,000 jobs in January. While the unemployment rate rose one-tenth of a percentage point to 3.6% last month, that was because more people entered the labor force, a sign of confidence in the labor market. Thursday's claims report also showed the number of people receiving benefits after an initial week of aid fell 9,000 to 1.72 million for the week ended Feb. 15.

In Commodity news: Crude oil prices tumbled for a fifth day overnight to their lowest in more than a year over fears coronavirus could slow the global economy and erode demand for crude. Brent crude dropped $US1.25, or 2.3%, to settle at US$52.18 a barrel, off the session low of US$50.97 a barrel, the lowest since December 2018. West Texas Intermediate (WTI) futures sank US$1.64, or 3.4%, to US$47.09, after hitting their lowest since January 2019.

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