All three U.S. stock market indices – Dow Jones, S&P 500, and Nasdaq – plunged for the second-straight day, around 3% on Tuesday. Besides traditional stocks, the commodities sector is also under massive selling pressure.
The global economy is on a toss with the rising cases of coronavirus outside China. So far, over 80,000 people globally are reportedly infected with the COVID-19 virus. The situation got worse this week after South Korea and Italy reported a massive surge in the infected cases last Sunday.
The reaction of the global markets to this news was obvious. Markets all across Asia, Europe, and the U.S. plunged severely on Monday. The Dow Jones continued its losses for a second straight on Tuesday.
Dow Jones closed Tuesday’s trading session with a massive 3.15% drop i.e. tanking over 850 points in a single session. This has been the ugliest crash of Dow Jones in the last decade after 2008. If we look at the chart, Dow Jones has lost nearly 2000 points in just the last two trading sessions.
The alarming spread of the coronavirus has certainly caught the attention of global leaders alike. U.S. President Donald Trump tweeted on Tuesday saying that his administration is taking all measures possible to contain the virus spread.
CDC and my Administration are doing a GREAT job of handling Coronavirus, including the very early closing of our borders to certain areas of the world. It was opposed by the Dems, “too soon”, but turned out to be the correct decision. No matter how well we do, however, the…..
— Donald J. Trump (@realDonaldTrump) February 26, 2020
U.S. Health Secretary Raises Concerns
So is it the right time to buy on the dips? Well, wait for some more time! U.S. Health Secretary Alex Azar said asked for more funds anticipating that the Coronavirus can spread further. Azar thinks that the U.S. is likely to see more infected cases ahead. Speaking before a Senate subcommittee, he said:
“While the immediate risk to individual members of the American public remains low, there is now community transmission in a number of countries, including outside of Asia, which is deeply concerning.”
“We are working closely with state, local, and private sector partners to prepare for mitigating the virus potential spread in the United States, as we will likely see more cases here,” he added.
The ripples of Dow Jones’ fall on Tuesday were felt across the broader markets as well! Both, the Nasdaq and the S&P 500 plunged around 3%. Even the commodities sector was feeling the heat of the marketwide fall.
Crude oil sector plunged 3.2% while even gold remained under pressure despite the price gains in recent weeks. On the contrary, the U.S. Treasury bond and the mortgage rates in the country have hit a multi-year-low. Also, consumer confidence has dropped below the estimated forecasts but remains decent at 130.7.
Outside the U.S., the situation in Europe and the Middle East continues to worsen further. Italy is witnessing a rapid surge in the number of infected cases while in the Middle East, Iran remains the most infected.