The Dow and S&P 500 fell into correction territory on Thursday amid a continued selloff of US stocks. Investors continue to fret over the coronavirus outbreak.
Equities opened lower, and the Dow dropped more than 10% below its most-recent peak, putting it in a correction. The same held true for the Nasdaq Composite, which was the only major stock index to end Wednesday in the green.
The Dow dropped 2.2%, or more than 600 points, shortly after the opening bell, while the Nasdaq was 3% lower.
Even though the indexes are in a correction, they are still some ways away from a bear market, which is defined as 20% or more below the most recent peak.
The S&P 500 was down 2.6%. In the United Kingdom, the FTSE 100 also fell into correction territory Thursday.
Worries about the coronavirus outbreak are mounting this week, with the US Center for Disease Control and Prevention expecting cases in the United States to rise. The virus has now infected more than 82,000 people worldwide, with the vast majority of cases in China.
On the investment side, corporations continue to warn that they won’t meet their first quarter earnings targets. Microsoft announced that late Wednesday. Goldman Sachs said in a report Thursday that it now thinks US companies will generate zero earnings in 2020.
“What’s even more disconcerting is that the news headlines haven’t been all that bad yet,” said Paul Hickey of Bespoke Investment Group. “Right now, it’s the fear of what could happen that’s driving the markets rather than what is actually happening.”
Indeed, the US economy is thought to be relatively more resilient against the effects of the virus as it is not as reliant on trade as its peers. The second reading of fourth quarter GDP left growth unchanged at 2.1%.