Stocks plunge on slowing growth, coronavirus fears

Stock market volatility returned Friday as the spreading coronavirus that has brought China to a standstill fanned fears the outbreak will escalate into a global social and economic calamity.

The Dow Jones industrial average fell 603 points or 2 percent, wiping out January’s gains and launching the blue chips on their worst start since 2016. The Dow closed at 28,255. The Standard & Poor’s 500 index and Nasdaq composite fell 1.77 and 1.59 percent, respectively.

Stocks were hit from several sides. Delta Air Lines and American Airlines joined United Airlines and a large group of European carriers in suspending all service to China, as demand for service plummets and officials scramble to contain the spread of the disease.

On Thursday, the World Health Organization declared a public health emergency, after declining to do so the previous week. The pneumonia-like virus has infected more than 9,900 people in China and killed 213 and is spreading rapidly. The U.S. Centers for Disease Control and Prevention reported the first person-to-person transmission of the virus in the United States, a man whose wife contracted the virus in Wuhan was diagnosed with the illness. The United Kingdom and Russia both reported their first cases Friday.

The outbreak presents a threat to the global economy, as it paralyzes China’s workforce and dampens its powerful manufacturing industry. It is forcing global firms with roots in the country to freeze operations and seek ways to reorient supply chains.

“There is a growing recognition that the coronavirus contagion is worsening, with more travel restrictions and the number of infected already exceeding the total infected by SARS,” said Kristina Hooper, chief global market strategist for Invesco.

From an economic perspective, the outbreak’s timing is especially punishing, dragging down growth prospects and taking a bite out of corporate earnings just when investors had hoped for a boost after the truce in the U.S.-China trade war. A Chicago report showing the weakest manufacturing in five years added to market woes on Friday.