Coronavirus Update: WHO Raises Risk Of Global COVID-19 Pandemic, Powell Says Fed Will Take Action

U.S. Federal Reserve Chairman Jerome Powell pledged Friday the central bank would to everything possible to mitigate the effects the coronavirus is having on the economy as the World Health Organization increased its risk assessment for a global pandemic to very high.

Powell’s statement came as Wall Street posted their worst week since the 2008 financial crisis and knocking stocks into a correction. The sell-off was fueled by worry failure to contain COVID-19 would hurt corporate profits and economic growth. The S&P 500 ended more than 11% lower from its peak. Only one S&P stock, Regeneron Pharmaceuticals Inc. (REGN), finished higher, up 8% on its effort to develop a treatment for the virus. The Dow Jones Industrial Average was 13% lower.

WHO reported 83,652 people have been sickened by the virus worldwide, 4,691 in 51 countries outside China. Of those who developed the virus, 2,858 have died. The spread of the disease is now three times higher outside China, the epicenter of the outbreak, than inside.

WHO Director-General Tedros Adhanom Ghebreyesus said in the past 24 hours Denmark, Estonia, Lithuania, Netherlands and Nigeria joined the list of affected countries, bringing the total to 51.

But on a more positive note, “We do not see evidence as yet that the virus is spreading freely in communities. As long as that’s the case, we still have a chance of containing this virus.”

He said though the chances of a global pandemic is now very high, Tedros said WHO is not yet ready to make that declaration.

“Our greatest enemy right now is not the virus itself. It’s fear, rumors and stigma. And our greatest assets are facts, reason and solidarity,” he said.

Powell tried to allay fears the virus would damage the economy.

“The fundamentals of the U.S. economy remain strong,” Powell said in a statement. “However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”

Analysts said investors already were pricing in a quarter percentage point cut in interest rates ahead of the Fed’s March 17-18 meeting. The federal funds rate is currently 1.75%.

White House Chief of Staff Mick Mulvaney told conservatives gathered outside Washington for the Conservative Political Action Conference schools likely would close and travel would be disrupted by the virus.

United Airlines (UAL) extended its cancellation of all flights between the U.S. and China through April and also announced plans to reduce service to Tokyo and Osaka, Japan, as well as Singapore and Seoul. Flights to China were suspended earlier this month.

“It is a fast-moving situation,” United spokeswoman Leslie Scott said. “We are in daily contact with the CDC and other global health organizations as we continue to evaluate our schedule.”

The airline said demand for its Asian routes outside China has dropped 75% as a result of the coronavirus outbreak.

Lufthansa said it would ground 10 more plans bringing to 23 the number taken out of service as a result of the outbreak. The airline also was considering a reduction in workers' hours.

The virus has resulted in the cancellation of at least 347,414 flights from airline schedules since Jan. 24, travel analytics firm Cirium reported.