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The Dow Is Crashing & This Ex-FDA Chief Warns a U.S. Coronavirus Outbreak Is Coming

Last Updated March 30, 2023 8:44 AM
Josiah Wilmoth
Last Updated March 30, 2023 8:44 AM

The Dow Jones crashed on Monday, and a former FDA commissioner warns that a U.S. coronavirus outbreak appears “inevitable.”

a group of people on a trading floor

  • The Dow, S&P 500, and Nasdaq all crashed hard on Monday as Wall Street began to reckon with the coronavirus outbreak.
  • Investors piled into haven assets, igniting a gold price surge and pounding Treasury yields.
  • A former FDA commissioner says the government needs to prepare for a terrifying U.S. coronavirus outbreak.

The Dow Jones Industrial Average crashed around 400 points on Monday as investors reckoned with what the spread of the deadly coronavirus outbreak means for the U.S. stock market.

Wall Street worries that the virus threatens an already-sluggish global economy. But according to former FDA Commissioner Scott Gottlieb, investors need to prepare for the outbreak to start hitting much closer to home.

Dow Plunges As Investors Flee Risk Assets

Major U.S. stock indices plunged indiscriminately on Monday as investors fled risk assets.

a line graph with a red line and a blue line
The Dow Jones crashed on Monday as the stock market wrestled with the worsening coronavirus outbreak. | Source: Yahoo Finance 

As of 10:02 am ET, The Dow Jones Industrial Average fell had suffered a net loss of 402.37 points or 1.39% to trade at 28,587.36.

The S&P 500 slid 1.44% to 3,248.06.

The Nasdaq endured the worst setback, diving 1.81% to 9,146.08.

The CBOE VIX, a measure of implied volatility known as the stock market’s “fear gauge,” jumped 21.91% to 17.74, and haven assets basked in the upswing in risk-off sentiment.

The gold price rallied 0.38% to $1,577.90.

U.S. Treasury bond yields fell across the board, dropping the yield on the benchmark 10-year note stood at just 1.615%. Bond yields fall as prices rise.

Ex-FDA Chief: Prepare For A U.S. Coronavirus Outbreak

Risk assets don’t like uncertainty, and today’s stock market plunge betrays the sheer apprehension about China’s coronavirus epidemic, which looks more and more like a global outbreak every day.

Chinese officials initiated the largest quarantine in human history  to contain the outbreak, but the death toll continues to mount.

Beijing has acknowledged 2,862 confirmed cases in China and 81 deaths , but public health experts fear that the government may be deliberately underreporting  the true extent of the epidemic.

a man wearing a surgical mask talking on a cell phone

The virus has already spread to more than a dozen countries. The Centers for Disease Control and Prevention (CDC) has identified five confirmed cases in the United States and continues to monitor scores of other potential cases.

No U.S. coronavirus patient has died – yet – but former Food and Drug Administration (FDA) Commissioner Scott Gottlieb says that the “emergence of outbreaks in the U.S.” appears “inevitable.”

Writing in a CNBC op-ed, Gottlieb says he is most concerned  that doctor’s offices, hospitals, and other front-line healthcare providers are not equipped to diagnose coronavirus without CDC aid.

He says that the government needs to develop tests that providers can administer at the point of care before the number of confirmed cases in the U.S. begins to spiral out of control.

What Coronavirus Means For The Stock Market

Gottlieb is not an alarmist, but his warnings are quite alarming even without any fatalist flourishes.

For investors, the biggest concern is how severely the crisis will affect economic growth, both at home and abroad. Given that the outbreak started in China – the “biggest driver of global growth”  – it’s clear that it will have a negative impact.

Nobody knows how great that impact will be, but forecasts didn’t leave much margin for error even before the coronavirus panic. Most economists already expected U.S. GDP growth to slide below 2% in 2020 , and even those forecasts assume a permanent cease-fire in the U.S.-China trade war.

a line graph showing the number of shares per share
Growth-related commodities like copper (blue) and oil are getting pummeled by coronavirus fears. | Source: Yahoo Finance 

Traders don’t seem to want to wait to find out, and growth-related asset prices are in decline across the board along with the Dow and broader stock market.

Oil prices extended their brutal pullback. WTI crude futures dropped 2% to just over $53.00, while Brent crude slid below $60.00 following a 2.15% retreat.

Base and ferrous metals are trending lower too. Copper and nickel both fell more than 2%, while aluminum and iron ore suffered smaller declines.

This article was edited by Sam Bourgi.