- Dow Jones Industrial Average (DJIA) futures fell 500 points overnight.
- Coronavirus cases spike higher again in Wuhan – the epicenter of the outbreak – dashing some hopes of containment.
- California declares a state of emergency after reporting first COVID-19 fatality.
The Dow Jones soared to its second-largest points gain in history yesterday. But the momentum fizzled out overnight with Dow Jones Industrial Average (DJIA) futures down 500 points.
The drop comes as figures out of Wuhan revealed a surprise spike in new coronavirus cases. It snaps a three-day decline at the heart of the COVID-19 outbreak.
New coronavirus cases in Mainland China
- Tuesday: 125
- Wednesday: 119
- Thursday: 139
The figures dashed some hopes of containment in Wuhan. The city’s party chief admitted there was still work to do.
The situation facing epidemic control in Wuhan is still complicated. We will not be able to contain the spread if we do not impose unified strict measures – Wuhan party chief Chen Yixin.
Investor concerns also grew as California reported its first fatality and declared a state of emergency.
Dow futures plunge after Wednesday’s surge
Wuhan man dies despite being cleared of coronavirus
The unexpected rise in Chinese numbers on Thursday can partly be attributed to travelers returning from other coronavirus hotspots like Iran and Italy. China has reported 20 imported cases of the virus, and at least one case in Wuhan linked to the Iran outbreak. As Reuters reported:
Authorities have asked overseas Chinese hoping to return home to reconsider their travel plans.
Another worrying report out of Wuhan emerged overnight. A 36-year-old man died in his home, despite being cleared of COVID-19 and discharged from hospital.
California declares state of emergency
The U.S. death toll has risen to 11 after California reported its first fatality. The state has also confirmed 53 positive cases of the virus. California Governor Gavin Newsom declared a state of emergency last night.
The death has been linked to the Grand Princess cruise ship, which has now been held offshore until everyone on board is tested.
We’re holding that ship, which (has) thousands of passengers as well, off the coast, and we’ll be conducting those tests – Newsom
Dow Jones braces for raft of profit warnings
With little sign of containment, Wall Street is now braced for the full economic impact of the coronavirus. The UK saw its first corporate casualty as FlyBe – Europe’s largest regional airline -went bankrupt on Thursday morning.
Unfortunately, with the situation that has developed with [coronavirus], an already weak company, I’m afraid, just hasn’t been able to survive – British Transport Secretary Grant Shapps
In the U.S., General Electric just warned investors that revenue will take a hit in the coming quarters. And Boeing is struggling to keep pace with the rest of the market.
Coronavirus is driving the stock market
The volatile stock market continues to be driven by the COVID-19 outbreak more than any other factor. Although Joe Biden got most of the credit for yesterday’s 1,200 point bump, analysts say it’s more about coronavirus sentiment.
In this case, we’re more comfortable that COVID-19 is the larger culprit than Bernie (or Joe), and less impactful to intermediate or long‐term dislocations – Jeff deGraaf, Renaissance Macro Research.
For now, coronavirus headlines – and the response from lawmakers – are firmly in charge of the markets.
This article was edited by Samburaj Das.