Coronavirus has spread across the world, with a rapid increase in cases in Korea and Italy in one week. The growing fear of the virus has impacted investors’ confidence in the economy and struck the U.S. stock market.
Three major U.S. indexes are facing their worst week since the 2008 recession. On the New York Stock Exchange, the stock market dropped 1000 points on Monday and 900 points on Tuesday.
The global outbreak of the virus has impacted many sectors in the market, especially the travel industry. People have increasing concerns about travel after hundreds of confirmed cases on a cruise ship in Japan and new travel advisories to several countries.
Joe Fitter, a finance lecturer at Indiana University, said, “They believe that the profit of the companies that are trading on the stock market is going to go down for an extended period of time because of the impact of the Coronavirus.”
Joe Fitter talks about how the spread of the Coronavirus across the world impacts the U.S. stock market.
Fitter was living in China and Taiwan during the SARS and H1N1 avian crisis and saw a similar situation in the financial market. “In both of those situations that took many, many months to really stabilize and recover. There was certainly an initial shock and I think we’re starting to feel that now,” he said.
Experts expect the spread of the Coronavirus to slow down during hot summer months. Fitter said he expected the shock would continue at least through May or June.
However, the outbreak of the virus outside of Asia is still evolving. The Centers for Disease Control and Prevention has issued new travel advisories that recommend people avoid non-essential trips to South Korea, Italy, and Iran.
Fitter said if the situation does not improve, “We could be in for a much longer duration of time where we have to adjust to new ways of working, new ways of life to be sure there’s going to be some changes.”
The virus also triggers inflation on products in short supply such as facial masks. Different kinds of masks have been out of stock for weeks in many pharmacies in Bloomington. People can only buy masks in online stores at a higher price than usual.
Fitter suggests investors take the long term perspective and expect some deviations in the stock market in the coming months.
