Monday's Stock Market Close: US Equities Plummet, Dow Falls 455, As China’s Coronavirus Spreads

U.S. stocks plunged on Monday on more bad news about the spread of the coronavirus in China.

The Dow Jones Industrial Average dropped 454.68 points to 28,535.05 while the S&P 500 fell 52.02 points to 3,243.45 and the Nasdaq Composite Index tumbled 175.6 points to 9,139.31.

Volume on the New York Stock Exchange totaled 3.06 billion shares with 639 issues advancing, 106 setting new highs, and 2,321 declining, with 102 setting new lows.

Active movers were led by Achillion Pharmaceuticals (ACHN), NIO Inc. (NIO) and Advanced Micro Devices Inc. (AMD),

Chinese health officials reported that there are now almost 3,000 confirmed cases of the coronavirus in China with at least 81 fatalities.

The National Health Commission said the incubation period for the coronavirus is about 10 days and that even during that period it is contagious.

The World Health Organization’s director general, Dr. Tedros Adhanom Ghebreyesus, is flying to China to meet with government officials. On Monday, Chinese Premier Li Keqiang traveled to Wuhan, the epicenter of the outbreak in Hubei province. Wuhan and more than a dozen other cities with total population of more than 50 million are in lockdown.

China has also extended the Lunar New Year holiday to Feb. 2 in order to dissuade people from assembling in public.

The Centers for Disease Control and Prevention said on Monday that five people in the U.S. tested positive for the Wuhan virus.

“Investors tapped the brakes last week as overbought conditions and concerns over the coronavirus created a few speed bumps on the path to record-highs,” said Craig Johnson, chief market technician at Piper Sandler. “We continue to believe there is an elevated risk for a deeper pullback to develop.

U.S. President Donald Trump tweeted: “We are in very close communication with China concerning the virus. Very few cases reported in USA, but strongly on watch. We have offered China and President Xi any help that is necessary.”

“China is the biggest driver of global growth so this couldn’t have started in a worse place,” said Alec Young, managing director of global markets research at FTSE Russell. “Markets hate uncertainty, and the coronavirus is the ultimate uncertainty in that no one knows how badly it will impact the global economy.”

“Any economic shock to China’s colossal industrial and consumption engines will spread rapidly to other countries through the increased trade and financial linkages associated with globalization,” Stephen Innes, chief Asia market strategist at Axitrader, wrote in a note Monday. “I’m starting to think cash is the right place to be for the next few weeks.”

The Commerce Department said on Monday new home sales slipped 0.4% to a seasonally adjusted annual rate of 694,000 units in December. It was the third straight monthly decline in sales.

Markets in mainland China and Hong Kong were closed for the lunar new year holiday. Japan’s Nikkei-225 plunged 2.03%.

In Europe markets finished broadly lower, as Britain’s FTSE-100 dropped 2.29%, France’s CAC-40 fell 2.68% and Germany’s DAX plunged 2.74%.

Crude oil futures dropped 2.38% at $52.90 per barrel and Brent crude fell 0.46% at $58.31. Gold futures gained 0.63%.

The euro slipped 0.06% at $1.018 while the pound sterling fell 0.15% at $1.3055.

The yield on the 10-year Treasury plunged 4.52% to 1.605% while yield on the 30-year Treasury dropped 3.43% to 2.055%.