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Stocks Tumble Into Correction Territory On Coronavirus Fears

Johannes Eisele, AFP via Getty Images
AFP via Getty Images
Traders work during the opening bell at the New York Stock Exchange on Thursday. Wall Street stocks opened sharply lower amid fears the coronavirus will grow into a significant international health crisis.

Updated at 1:42 p.m. ET

Stocks continued their downward slide on Thursday, with major indexes falling into correction territory at times throughout the day. Investors are worried about the economic toll of a widening coronavirus epidemic.

The Dow Jones Industrial Average tumbled more than 500 points in the opening minutes of trading. The blue chip index was down more than 10% from its recent peak on Feb. 12 — the technical definition of a "correction." The broader S&P 500 index also fell 10% below its peak, reached on Feb. 19, before a partial recovery later in the day.

President Trump tried to project a note of calm in a news conference Wednesday evening, stressing that the United States is well prepared for any health crisis and predicting the stock market will recover, thanks in part to robust consumer spending. But investors were not immediately reassured.

A poll by Morning Consult this week found that 69% of U.S. adults are either "very" or "somewhat" concerned about the domestic economic impact of the epidemic, a 14 point increase from a few weeks ago.

Goldman Sachs lowered its forecast of corporate profits for this year and next. The firm expects zero growth in profits in 2020, as a result of reduced economic activity in both China and the U.S., reduced demand for American exports, supply chain disruptions and increased uncertainty.

The steep drop in financial markets could put a dent in consumer confidence and spending — a major driver of the U.S. economy. It may also increase pressure on the Federal Reserve to lower interest rates. On Tuesday, the central bank's vice chairman, Richard Clarida, said the Fed is monitoring the outbreak closely but he cautioned it's too soon to assess the economic effects.

Health officials also reported the first known case of coronavirus in the U.S. with no apparent link to China or other sources, suggesting that the virus may be spreading domestically.
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