Fear over the spread of the coronavirus tightened its grip on global stock markets. The indexes clearly reflect the situation. In the premarket Dow Futures lost over 600 points.The massive coronavirus-induced sell-off on Wall Street continued in premarket trade on Friday with the Dow Futures dropping over 600 points.Treasury yields continued to slide with the yield on the 10-year note falling below 1.20%. Meanwhile, oil prices declined for the sixth consecutive session.After losing nearly 1,200 points at the end of Thursday’s session, its biggest point drop in history, the Dow was down 688 points at 4:15 am ET. At the same time, the S&P 500 and the Nasdaq 100 lost 2.44% and 2.60%, respectively.Patrick Hennessy, head trader at IPS Strategic Capital said:“People have been so preconditioned
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Fear over the spread of the coronavirus tightened its grip on global stock markets. The indexes clearly reflect the situation. In the premarket Dow Futures lost over 600 points.
The massive coronavirus-induced sell-off on Wall Street continued in premarket trade on Friday with the Dow Futures dropping over 600 points.
Treasury yields continued to slide with the yield on the 10-year note falling below 1.20%. Meanwhile, oil prices declined for the sixth consecutive session.
After losing nearly 1,200 points at the end of Thursday’s session, its biggest point drop in history, the Dow was down 688 points at 4:15 am ET. At the same time, the S&P 500 and the Nasdaq 100 lost 2.44% and 2.60%, respectively.
Patrick Hennessy, head trader at IPS Strategic Capital said:
“People have been so preconditioned to buy the dip and to always expect the market to recover that people can get smacked around with moves like this. No one knows how this thing ends.”
The biggest fall came after California Governor Gavin Newsom announced the state was tracking at least 8,400 people for coronavirus, while there are 33 confirmed cases of the infection.
However, health officials said there was no cause for panic, stating the risk to the public remains low as there have been only a limited number of confirmed cases to date.
Trump Might Use Defense Production Act from ’50s
Still, it was said a day earlier that Donald Trump administration might use the Defense Production Act to compel companies to expand the production of protective masks and clothing needed to fight the coronavirus outbreak.
The thing is, the law from 1950 gives the president the power to make businesses fulfill orders deemed necessary for national defense. Now, the administration is considering invoking it as the United States stands short a larger part of about 300 million N95 face masks, as well as other equipment, needed to fight the outbreak.
We also shouldn’t forget that the White House announced on Thursday it appointed a health official that will lead the United States’ response against the coronavirus outbreak.
Ambassador Debbie Birx, who is in charge of the country’s global efforts to fight AIDS, will now also serve as the “White House Coronavirus Response Coordinator”.
She will report to Vice President Mike Pence, while also joining the task force led by Health and Human Services Secretary Alex Azar.
Is the Market Capable to Go Through?
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. Per the latest information there have been 83,876 infected, 2,867 dead and 36,816 recovered.
Doug Ramsey, chief investment officer at The Leuthold Group said:
“The timing of this was just the worst with respect to investor sentiment being elevated. I’m not sure that the market has really priced in the potential economic impact of this.”
Also, Goldman Sachs’ David Kostin warned U.S. companies will see no earnings growth this year.
Let’s also mention that European markets performed as bad as their American fellas. All indexes opened with sharp losses on Friday, ending a volatile week on a similar note amid fears over a potential coronavirus pandemic. Equity indices were red across the board with the German DAX plunging 471 points in the first moments of trading. Infineon led the losses on the Deutsche Boerse. In London, the FTSE 100 dropped 3.22%, while the CAC 40 lost 3.32% in early trade on the Euronext.
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