Fears over the spread of coronavirus hit the wallet of Wall Street on Thursday, as the Dow Jones fell 1,190.95 points (4.4%), according to CNBC.
The S&P 500 fell 4.4% to 2,978.76 while the Nasdaq dropped 4.6% to 8,566.48. The Dow recorded its worst day since February 2018 and both the Nasdaq and S&P 500 had their biggest one-day loss since August 2011.
Thursday marked the first time the S&P 500 closed below 3,000 for the first since October 2019.
“We’re extremely cautious in the short term,” Tom Hainlin, global investment strategist at Ascent Private Capital Management, told CNBC. “No one really seems to be an expert on the coronavirus. We haven’t seen anything like this really in our investing lifetimes.”
On Wednesday, the Center for Disease (CDC) confirmed the first U.S. coronavirus case of “unknown origin” in northern California, indicating possible “community spread” of the disease.
CNBC reported the patient had no travel history or contacts that would have put the person at risk, the CDC said. California Gov. Gavin Newsom said Thursday the state is monitoring 8,400 people for the virus.
Andrew Schrage, CEO and co-founder of Money Crashers, told MReport that although the markets recovered their footing recently, “downside risks persist.”
“Global markets will not take well to a sustained increase in infection rates outside east Asia, especially not coming at the tail end of an unusually long business cycle,” Schrage said.
He added the airline and tourism industry could be the hardest hit, as they are especially vulnerable to pandemics.
“We’ve seen that in this current outbreak, with some experts forecasting the first year-over-year decline in global air travel since the global financial crisis,” Schrage said.
CNBC said American Airlines’ stock fell 7.7% and United Airlines’ fell 2.4%. Las Vegas Sands and MGM resorts reported 1.3% and 4.5% drops, respectively.
While he said the impacts to housing have been minimal, that would change if Asia’s economic slowdown constricts global growth. Housing could also be disrupted if homebuilders face material shortages.
Schrage added: “However, should a slowdown drive interest rates lower, homebuying activity could pick up in the U.S.”
Mark Fleming, Chief Economist for First American, mentioned exactly that while appearing on CNBC Thursday. He said it will be interesting to track the virus over the next few, especially with the spring homebuying season just weeks away.
He noted that the fewer people that are out looking at homes, many balance the supply and demand dilemma the market is faced with.
“As long as that demand and supply imbalance exists and people aren’t out shopping for homes then that Spring homebuying seasons get all that much hotter than it already is … that’s just a recipe for faster price appreciation,” Fleming said.
Fleming said the virus—if it continues to impact the economy—could cause home prices to report an annual appreciation of 6-7%. However, rising home prices could lead to increase buying power if the Fed steps in to lower interest rates, ultimately making homebuying more affordable.