The U.S. stock market lost the most points in two years on Monday, Feb. 24, as the coronavirus epidemic threatens to drag global economic growth.
All three key indexes fell sharply by more than 3%, with the Dow Jones Industrial Average dropping 1,031.61 points, or 3.56%, to close at 27,960.80, CNBC data shows.
This is the biggest point and percentage-point drop in a single day for Dow Jones since February 2018, which erases all its gains for 2020. The index is now down 2% for the year.
The S&P 500 fell 3.35% to 3,225.89, which is also the worst day in two years and wipes out its year-to-date gain.
The Nasdaq Composite closed 3.71% lower at 9,221.28.
The market slumped after the International Monetary Fund (IMF) in a summit over the weekend lowered the global economic growth due to the coronavirus outbreak that is spreading from China to the world.
The coronavirus outbreak, which was first reported in China, has been spreading to other countries, with more than 79,000 people worldwide infected so far. South Korea and Italy are two countries that have reported a spike in the number of confirmed cases in recent days, according to The Associated Press.
China’s economy has been hardest hit as businesses and factories sit idle and people remain homebound because the communist regime has severely restricted travel and imposed strict quarantine measures.
The IMF cut global growth by 0.1 percentage points to 3.3% in 2020, while downgrading China’s growth by 0.4 points to 5.6% this year.
“The second largest economy in the world is completely shut down. People aren’t totally pricing that in,” Opportunistic Trader CEO Larry Benedict said, referring to China. He added that a 10% to 15% correction in stocks may be starting.
Quincy Krosby, chief market strategist at Prudential Financial, also said, “The market had been sanguine about the spread of the coronavirus.”
“Companies are assessing their suppliers and their supply chains and seeing whether or not their revenue is going to slow,” Krosby said. “Because of that, this has become a sell-first-ask-questions later type of market.”