On Monday, the stock market had its worst day in two years. The Dow Jones Industrial Average closed down 1,031 points, the S&P 500 dropped 111 points, and the Nasdaq fell 3.7%.
The worldwide epidemic of the coronavirus is being blamed for the market drop, as markets around the world suffer from fears that global supply chains will be harmed. Travel stocks were decimated with companies like American Airlines and Royal Caribbean Cruises seeing losses of over 7%.
The markets were spooked by reports that the virus was spreading in Italy and South Korea. The city of Milan in Northern Italy looks like a ghost town following a government-ordered lockdown of the city. The New York Times reported, “Milan is not a closed city, but it is a drastically slowed one after Italy experienced a surge in coronavirus cases concentrated mostly, though not exclusively, around Milan, the country’s economic engine, cultural capital, and most dynamic city.
In America, the Center for Disease Control (CDC) has issued a travel warning for Americans planning to travel to South Korea. USA Today reported, “On Monday, the CDC issues a ‘level three’ advisory, which warns to ‘avoid nonessential travel’ to the East Asian country. The federal agency issued a similar level three warning for travel to China Saturday due to ‘widespread community transmission,’ excluding Hong Kong, Marceau, or Taiwan.
Similarly, the U.S. State Department issued a level two travel advisory Saturday for South Korea over the coronavirus outbreak.”
The virus is believed to have originated from the city of Wuhan in China, although there is debate over how the disease began to spread in the first place. Some believe it was first contracted from bats eaten at a local market, while others believe it was the fault of Chinese government scientists who were developing a chemical warfare agent.
The Washington Times reported back in January that “The deadly animal-borne coronavirus spreading globally may have originated in a laboratory in the city of Wuhan linked to China’s covert biological weapons program, said an Israeli biological warfare analyst.
Radio Free Asia last week rebroadcast a Wuhan television report from 2015 showing China’s most advanced virus research laboratory, known as the Wuhan Institute of Virology. The laboratory is the only declared site in China capable of working with deadly viruses…
The Wuhan institute has studied coronaviruses including the strain that causes severe acute respiratory syndrome (SARS), H5N1 influenza virus, Japanese encephalitis, and dengue. Researchers at the institute also have studied the germ that causes anthrax, a biological agent once developed in Russia.
‘Coronaviruses [particularly SARS] have been studied in the institute and are probably held therein. ‘
ARS is included within the Chinese BW program, at large, and is dealt with in several pertinent facilities.”
The death toll continues to rise in China with a reported 2,663 deaths and more than 77,600 confirmed cases.
The Coronavirus is a serious threat to the world population, however, a little perspective is necessary. In the first two months of the year, 14,000 people have died of the flu in the United States and 61,000 died in 2019. Although it is a serious situation, it is still not a pandemic.
The real effect of coronavirus has been on manufacturing, with major corporations like Apple struggling to move goods to and from quarantined areas.
Still, much of the response seems to be fear-driven rather than based on actionable information.
The market might be overacting on this one.