Stock Market Continues Plummet As Coronavirus Fears Continue Rise
MARY LOUISE KELLY, HOST:
There was no rest for the weary on Wall Street today. Stock prices continue to plummet with no bottom in sight. The Dow lost 1.4%, capping the worst week in the market since the 2008 financial crisis. NPR's Jim Zarroli joins us now with more.
Hey there, Jim.
JIM ZARROLI, BYLINE: Hi, Mary Louise.
KELLY: So I know people were hoping things might stabilize today, end the week with maybe less grim news. Did something happen today to send prices falling yet again?
ZARROLI: No, it's just a kind of a continuation of what we've been seeing all week. I mean, we read these stories about cases of the coronavirus popping up in more and more countries. A lot of companies, like Google and J.P. Morgan, are telling employees not to travel. You have companies worried about their supply chains, meaning they're not sure where they're going to get the parts they need. And you actually have places in China and Italy where whole cities and towns are under lockdown, which means no - you know, not much economic activity will take place. So you're seeing, you know, whatever happens when investors get scared about the future. They're selling stock.
KELLY: And just to underline how fast this has happened, had you and I been speaking last Friday, we would've been having a really different conversation.
ZARROLI: Right. Right. I mean, this has happened with just stunning speed. Last week, stock prices were actually hitting records.
ZARROLI: And since then, the S&P 500 is - has actually fallen more than 13%. That is a really rapid loss. I mean, I spoke with Paul Christopher, who's head of global market strategy at Wells Fargo Investment Institute, and he says he's never seen anything like it.
PAUL CHRISTOPHER: It's unprecedented, really. And certainly, in my career and even if you go back 70 years, we've never had a correction - that is to say a 10% pullback from a high - develop so quickly.
ZARROLI: And Christopher says this has happened so fast because the coronavirus suddenly seems to be spreading around the world so quickly. I mean, before this week, it was thought of as a China problem. Now you're seeing cases in South Korea and Iran and Italy and here in the United States. And people are worried.
KELLY: President Trump likes to talk about how well the stock market has done under his administration. What is he saying about this week?
ZARROLI: Yeah. He has often held up the strong stock market as just another piece of evidence of how well the economy is doing under his watch. But you know, you live by the Dow; you die by the Dow. The drop this week has just wiped out all of last year's gains, and the Trump administration has basically said, you know, people need to calm down. There's no evidence that the epidemic has hurt the economy so far.
Here is Larry Kudlow, who's an economic adviser to the White House, talking to reporters.
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LARRY KUDLOW: The head of the World Health Organization today said, let us not overreact. I think that's an important point. I will make the same point on the economy. The economic side - there is no tragedy in the United States.
ZARROLI: And you know, there are a lot of people that share that view. They say investors are maybe panicking unnecessarily. Today, the chair of the Federal Reserve, Jerome Powell, said the fundamentals of the economy remain strong. He said if things turn bad, though, the Fed is ready to act as appropriate to support the economy, which in Fed-speak means if things get too bad, the Fed can, you know, cut interest rates.
KELLY: Got it. OK. Now, we've, of course, watched the markets weather epidemics before, weather big natural disasters before. Is there an example from history that might tell us what to expect in terms of how this market might react, what it might do next?
ZARROLI: Yeah. I mean, I think big, sudden events can really send the stock market reeling. You look at 9/11; you look at the Japanese earthquake and tsunami in 2011 - they sent stock prices falling. And in each case, the market came back pretty quickly and actually gained ground. Now, this epidemic is different 'cause it's so hard to see the end of it. I mean, we don't know how far it's going to spread, and that's something that the stock market really just doesn't know how to deal with.
Here's Quincy Krosby. I spoke with her today. She's chief market strategist at Prudential Financial.
QUINCY KROSBY: Uncertainty regarding something as serious as this has a tendency to induce the kind of fear that, in the market view, is sell and ask questions later.
ZARROLI: So we may come back in a few months and find stocks have completely recovered or, you know, we could see more weeks like this one when stocks keep losing ground.
KELLY: Thank you, Jim.
ZARROLI: You're welcome.
KELLY: NPR's Jim Zarroli in New York.
[POST-BROADCAST CORRECTION: In this report, we incorrectly say that the week's stock market losses wiped out the previous year's gains. While the losses reversed part of the 2019 gains in the Dow Jones Industrial Average, they did not eliminate all of them.] Transcript provided by NPR, Copyright NPR.