The Dow Jones Industrial Average drops more than 1,000 points due to the virus outbreak begun at Wuhan China. Investors are worry because of the Covid-19 outbreak and according to them; this is the worst day for the stock market in 2 years.
It lost 1,031.61 points, or 3.6%, to 27,960.80. At its low point, it was down 1,079 points to be exact.
Most investors seek safety in U.S. government bonds, gold and high-dividend stocks like utilities and real estate. The yield on the 10-year Treasury fell to the lowest level in more than 3-years.
This is the biggest loss since December 2018. The Nasdaq dropped 355.31 points, or 3.7%, to 9,221.28. The S&P 500 index skidded 111.86 points, or 3.4%, to 3,225.89. While the Russell 2000 index of smaller company stocks gave up 50.50 points, or 3%, to 1,628.10.
“Covid-19 (Coronavirus) is a virus affecting the respiratory organs and is quite similar to SARs (Severe Acute Respiratory Syndrome) a virus that spread last 2002 which killed more or less 800 people and triggered economic crash on that same year.”
And due to the viral outbreak, many traders/investors are panicking and lots are selling their investment. Though it can be a serious matter, for me it’s a bit too much. But since most investors are panicking, it can be an opportunity to some.
Investors are positive that the Federal Reserve will cut interest rates this year 2020 to help prop up the economy. According to CME Group, they’re pricing in a nearly 95% probability of a cut this year. A month ago, they saw only a 68% probability.
Some experts say stocks have been rising in last week promptly due to the drop in yields. Federal Reserve lowered rates 3 times last year in which Bonds are offering less in interest. When bonds are paying such meager amounts, many investors say there’s little real competition other than stocks for their money.