Stocks close with second day of steep losses amid coronavirus panic

Stocks on Tuesday extended a brutal stretch of losses into a second day as federal health officials warned Americans to prepare for an inevitable coronavirus outbreak in the U.S.

The Dow Jones Industrial Average closed with a loss of 878 points Tuesday, a decline of 3.1 percent, after a 1,031-point, 3.6-percent loss on Monday. The Nasdaq composite also fell roughly 2.8 percent, while the S&P 500 index sunk 3 percent.

The rapid decline in U.S. stock prices after six weeks of solid gains reflects a heightened sense of anxiety from Wall Street to Washington, D.C., over the potential health and economic impacts of the rapidly spreading coronavirus outbreak.

More than 80,000 people in 35 countries have been confirmed to have contracted the potentially lethal respiratory illness, the vast majority of which are in China, where the virus is believed to have originated. The outbreak has claimed more than 2,600 lives and has spread quickly through Asia and into Europe with several dozen confirmed cases in the U.S.

A sharp increase in South Korean coronavirus cases, a rapid outbreak within Italy, and concerns about Iran’s handling of the virus raised alarms over the weekend and prompted a stark warning from U.S. health officials Tuesday.

Nancy Messonnier, a top official at the Centers for Disease Control and Prevention, told reporters Tuesday that an outbreak within the U.S. appears inevitable and that the agency expects to see community spread of the disease.

“It’s not a question of if this will happen but when this will happen and how many people in this country will have severe illnesses,” she said. “Disruption to everyday life might be severe.” 

Public health officials have warned that the mildness of early coronavirus symptoms and long incubation period make the illness difficult to contain and easy to spread. Those who contract the illness may not present symptoms, which resemble influenza, until weeks after infection, if at all.

Efforts to contain the outbreak in China and South Korea and across eastern and southern Asia have already disrupted crucial supply lines for global businesses and derailed the Chinese economy. Businesses dependent on Chinese consumer spending or steady international travel are also bracing for meager first-quarter earnings.

While economists say it is too early to assess the potential economic damage caused by the outbreak, investors are fleeing to safety as public health officials scramble to contain the virus.

The Dow has fallen roughly 7 percent since trading began Monday, followed by a 6.4 percent drop in the Nasdaq and a 6.3 percent drop in the S&P index. The dash away from stocks drove yields on U.S. Treasury bonds to record lows and pressured interest rates down across the board.

President Trump and top White House economic officials sought to curb Wall Street’s bleeding Tuesday, downplaying the risk of a pandemic even as federal health officials sound the alarm.

“We have very few people with it,” Trump told reporters at a press conference in New Delhi on Tuesday, saying it was “well under control” in the U.S.

“The people are getting better. They’re all getting better,” Trump said.

Larry Kudlow, director of the White House National Economic Council, also claimed during a CNBC interview Tuesday that the U.S. had contained the coronavirus despite warnings from CDC officials.

“I won’t say [it’s] air-tight, but it’s pretty close to air-tight,” Kudlow said on CNBC’s “The Exchange.”

But public health officials say the U.S. is far from safe from its own outbreak of the virus.

“We’ve seen what this disease can do. We’ve seen what it did in China. We’ve seen what it did on the cruise ship,” said Jeremy Konyndyk, a senior fellow at the Center for Global Development who directed USAID’s Office of Foreign Disaster Assistance during the Ebola outbreak. 

“This is a highly transmissible disease, and there’s nothing magic about China that means it’s going to spread there and not here,” he said.