Stocks climbed back out of the hole, erasing most their earlier losses on Thursday after the World Health Organization (WHO) mitigated trepidation about the deadly coronavirus that began in China.
The S&P 500, which was off overnight and into the early morning session, has rebounded strongly, and is now positive on the day, as of 1:15 P.M. EST. Meanwhile, the Nasdaq Composite was up 0.1% and has continued to rally. The Dow Jones Industrial Average was down in afternoon trading after dropping more than 200 points earlier in the session, but has been inching closer to break-even.
Investors had been fretting over the virus as the number of confirmed cases crested 600, and the virus, which originated in Wuhan, China, has now been revealing reported cases in Singapore and the U.S. and possibly other countries.
The outbreak “has heightened fears of a global pandemic with potential implications across the economy,” said Robert Samuels, consumer analyst of the Americas at UBS. He noted U.S. companies with exposure to China “could potentially be negatively impacted from lower demand as nervous consumers stay home should the virus continue to spread.”
With the upcoming Chinese New Year, disease prevention experts are concerned that the virus could disseminate rapidly during the busy travel period. Officials already have confirmed that the new enigmatic virus can be transmitted between humans and noted that 15 medical staff have now been infected, stirring fears of a international pandemic like the deadly SARS crisis in 2003, and prompting airport authorities around the world to intensify screening of travelers arriving from China.
Many people still recall the SARS crisis, which hit China in 2002 and was identified in 2003, killing nearly 800 people worldwide. It spread to other Asian cities such as Hong Kong, Singapore, Taipei and Beijing, and resulting in a severe downturn in the economies there.
“I remember the SARS outbreak very, very clearly and the impact it had. These things have an enormous hit on economies,” said Rob Carnell, Dutch bank ING’s chief economist, adding that some countries even slipped into recession.
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