Wall Street routed on Monday following the severity of coronavirus outbreak across the globe. As much as 30 countries beside China are now affected by the COVID-19 illness and the number is growing day by day. Investors remained highly concerned about global economic growth. The three major stock indexes plunged as a result of growing movement of funds from risky equities to safe-haven assets.
The Dow Jones Industrial Average (DJI) tumbled 3.6% or 1,031.61 points to close at 27,912.44. The S&P 500 tanked 3.4% or 111.86 points to close at 3,225.89. Meanwhile, the Nasdaq Composite Index closed at 9,221.28, plummeting 3.7% or 355.31 points.
The fear-gauge CBOE Volatility Index (VIX) jumped 46.6% to close at 25.03, highest closing since January 2019. A total of 10.59 billion shares were traded Monday, higher than the last 20-session average of 7.79 billion. Decliners outnumbered advancers on the NYSE 6.74-to-1 ratio. On Nasdaq, a 6.02-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in negative territory with all 30 components of the index closing in the red. Point wise, yesterday’s drop was the third largest in its history and highest in more than two years. Notably, he major loser of the Dow was UnitedHealth Group Inc. (UNH - Free Report) , which plunged 7.8%, marking its biggest single-day loss since Aug 8, 2011. UnitedHealth Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 ended in the red with each of its 11 sectors posted losses. The biggest decliner was the Energy Select Sector SPDR (XLE), which declined 4.74%, marking its worst single-day performance since Aug 24, 2015. The technology Select Sector SPDR (XLK) tanked 4.2%. Meanwhile, the tech-laden Nasdaq Composite finished in the red driven by stiff fall in large-cap tech stock prices.
For the first time since Dec 4, 2018, all three major stock indexes witnessed a single-day drop of 3% or more. At present, the Dow is down 2.20% and the S&P 500 is down 0.15% year to date, while the Nasdaq Composite is up 2.8%. Moreover, both the S&P 500 and the Dow have fallen below their respective 50-day moving average lines. Moreover, he Dow also slid below its 100-day moving average and is slightly above the 200-day moving average.
Coronavirus Outbreak Intensifies
China reported a jump in the coronavirus cases. So far nearly 2,700 people died in China out of nearly 78,000 virus-infected people. The death toll in South Korea crossed 250. Japan is also suffering from the spread of coronavirus disease in that country.
Recently, Italy alarmed its citizens after the death of death of four Italians due to the same cause. Globally, more than 30 countries are now affected from coronavirus disease. The IMF has reduced the global economic growth rate forecast by 0.1% and China’s economic growth forecast by 0.4%.
Demand Grows for Safe-Haven Assets
Demand for safe assets like gold and government bonds surged as more funds are shifted from equities to these assets. The price of gold for future delivery jumped 1.7% or $27.80 to settle at $1,676.60 an ounce on Comex, reflecting highest closing for any active future since February 2013.
Moreover, the yield on the benchmark 10-year US Treasury Note declined to its 5-month low to 1.377% and slightly above its historically low-level of 1.32% set in June 2016. Meanwhile, the yield on long-term 3-year US Treasury Note plummeted to its all-time low to 1.917% last week.
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