Global stocks are selling off as the coronavirus spreads throughout the globe. This time, U.S. stocks are as immune as European and Asian markets, as the spread throughout the globe intensifies the severity of the potential shock to global manufacturing supply chains.
TheStreet’s Katherine Ross dug into the full potential impact to international supply chains in a recent interview with Dun & Bradstreet’s Brian Alster.
The Dow Jones Industrial Average fell 880 points, or 3% Monday morning. The S&P 500 fell 3% as well. The tech-heavy Nasdaq fell 3.38%.
The virus has now spread to 28 different countries. In Italy, there are 219 reported cases. Many areas of Italy are quarantined.
U.S. importers have been largely insulated from the economic impact, as they’ve relied on extra inventory, but if they run out, they’ll need to import from China (and the rest of the world) sooner than anticipated. If they can’t import, they won’t meet demand. Also, U.S. companies with significant revenue exposure to China will be impacted.
Here are the five biggest losers on the Dow Jones:
United Health Care UNH: -4.62%
It’s unclear why United is falling so much, but insurance companies are forced to make payouts to sick customers.
Microsoft MSFT: -4.29%
Nike NKE: -3.93%
Nike sees 15% of its revenue come from its all-important growth market in China.
Apple AAPL: - 3.79%.
Apple produces hardware out of China and sees roughly 20% of iPhone revenue from China.
Goldman Sachs: -3.73%
The yield curve is inverted, with the 10-year treasury at 1.36% and the 3-month at 1.54%, as investors rush into safe treasuries on global growth fears. An inverted yield curve is a huge negative for bank profits.
“Stock markets around the world are beginning to price in what bond markets have been telling us for weeks — that global growth is likely to be impact in a meaningful way due to fears of the coronavirus,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “The trillion dollar question is whether or not the drop in global economic activity will cause the U.S. to go into recession, because anything short of that outcome will prove to be a buying opportunity in the stock market.”