Posted in: Market News
Published:
March 5, 2020 11:47 AM UTC

Dow Plunges 650 Points After Scary New Wuhan Report

Wuhan reported a surprise spike in new coronavirus cases on Thursday, dashing some hopes of containment in the outbreak's epicenter.

  • The Dow Jones Industrial Average (DJIA) plunged 650 points on Thursday.
  • Coronavirus cases spiked higher again in Wuhan – the epicenter of the outbreak – dashing some hopes of containment.
  • California declared a state of emergency after reporting its first COVID-19 fatality.

The Dow Jones Industrial Average (DJIA) soared to its second-largest points gain in history yesterday. But the momentum fizzled out overnight and the U.S. stock market opened to brutal losses.

The drop comes as figures out of Wuhan revealed a surprise spike in new coronavirus cases. It snaps a three-day decline at the heart of the COVID-19 outbreak.

New coronavirus cases in Mainland China

  • Tuesday: 125
  • Wednesday: 119
  • Thursday: 139

The figures dashed some hopes of containment in Wuhan. The city’s party chief admitted there was still work to do.

The situation facing epidemic control in Wuhan is still complicated. We will not be able to contain the spread if we do not impose unified strict measures – Wuhan party chief Chen Yixin.

Investor concerns also grew as California reported its first fatality and declared a state of emergency.

Dow tanks after Wednesday’s surge

The intense volatility continues on Wall Street today. The Dow Jones fell around 650 points when the opening bell rang, shattering yesterday’s monster rally.

The Dow Jones Industrial Average (DJIA) reversed much of the previous day’s historic recovery. | Source: Yahoo Finance

As of 9:39 am ET, the Dow had plunged 655.41 points or 2.42% to 26,435.45.

The S&P 500 fell 2.28% to 3,058.77.

The Nasdaq declined by 1.92% to 8,844.85.

Wuhan man dies despite being cleared of coronavirus

The unexpected rise in Chinese numbers on Thursday can partly be attributed to travelers returning from other coronavirus hotspots like Iran and Italy. China has reported 20 imported cases of the virus, and at least one case in Wuhan linked to the Iran outbreak. As Reuters reported:

Authorities have asked overseas Chinese hoping to return home to reconsider their travel plans.

Another worrying report out of Wuhan emerged overnight. A 36-year-old man died in his home, despite being cleared of COVID-19 and discharged from hospital.

California declares state of emergency

The U.S. death toll has risen to 11 after California reported its first fatality. The state has also confirmed 53 positive cases of the virus. California Governor Gavin Newsom declared a state of emergency last night.

The death has been linked to the Grand Princess cruise ship, which has now been held offshore until everyone on board is tested.

We’re holding that ship, which (has) thousands of passengers as well, off the coast, and we’ll be conducting those tests – Newsom

Dow Jones braces for raft of profit warnings

With little sign of containment, Wall Street is now braced for the full economic impact of the coronavirus. The UK saw its first corporate casualty as FlyBe – Europe’s largest regional airline – went bankrupt on Thursday morning.

Unfortunately, with the situation that has developed with [coronavirus], an already weak company, I’m afraid, just hasn’t been able to survive – British Transport Secretary Grant Shapps

In the U.S., General Electric just warned investors that revenue will take a hit in the coming quarters. And Boeing is struggling to keep pace with the rest of the market.

Coronavirus is driving the stock market

The volatile stock market continues to be driven by the COVID-19 outbreak more than any other factor. Although Joe Biden got most of the credit for yesterday’s 1,200 point bump, analysts say it’s more about coronavirus sentiment.

In this case, we’re more comfortable that COVID-19 is the larger culprit than Bernie (or Joe), and less impactful to intermediate or long‐term dislocations – Jeff deGraaf, Renaissance Macro Research.

For now, coronavirus headlines – and the response from lawmakers – are firmly in charge of the markets.

This article was edited by Samburaj Das.

Last modified: March 5, 2020 2:40 PM UTC

Ben Brown @_ben_brown

Ben is a journalist with a decade of experience covering financial markets. Based in London, UK, his writing has appeared in The Huffington Post and he was Chief Editor at Block Explorer, the world's longest-running source of Blockchain data. Reach him at benjamin-brown.uk or on Twitter at _Ben_Brown. Email ben @ benjamin-brown.uk.

Show comments