Stocks sink on new coronavirus fears, sending Dow briefly into correction

Stocks opened with steep losses Thursday amid growing fears that the novel coronavirus could be spreading within the U.S.

The Dow Jones Industrial Average sunk almost 600 points, roughly 1.8 percent, at the start of Thursday trading before recovering to a loss of 350 points shortly after 12 p.m The Dow spent the morning in formal correction territory after falling 10 percent from its most recent peak.

The Nasdaq composite fell 2.6 percent Thursday morning, while the S&P 500 index sunk 2.1 points and nearly hit a correction. Both recovered to losses of 1.5 and 1.1 percent respectively

Stocks have suffered consistent losses throughout the week as global health officials warn that the coronavirus may reach pandemic levels.

The Centers for Disease Control and Prevention (CDC) confirmed Wednesday the first U.S. coronavirus case of unknown origin in Northern California, one day after warning that community spread of the virus within the U.S was inevitable.

There have been more than 80,000 confirmed cases of the coronavirus, a potentially fatal respiratory illness, since December. More than 2,600 people have died due to the virus, which poses the greatest threats to children, the elderly and others with weakened immune or respiratory systems.

The virus is also likely to take a significant toll on economic activity in China and beyond as stores, factories, transportation hubs and schools close in a scramble to contain its spread. Corporations are projecting a steep hit to first quarter earnings due to severe supply line disruption, weighing on global growth.

President Trump has sought to soothe falling markets and an anxious public as public health officials brace for the coronavirus to spread within the U.S.

“The risk to the American people remains very low,” Trump said in a Wednesday press conference. “We’re very, very ready for this — for anything.”

The president has tapped Vice President Pence to lead the administration’s response to the coronavirus amid growing bipartisan criticism of its initial efforts. 

Trump also insisted Wednesday that the U.S. economy and stock market would quickly recover from any coronavirus-related slump, though economists have warned of a difficult trudge back to full power after the virus subsides.

Former Fed Chair Janet Yellen warned Thursday that a widespread outbreak within the U.S. could plunge the economy into a recession, but expressed that the country could hold steady.

“We could see a significant impact on Europe, which has been weak to start with, and it’s just conceivable that it could throw the United States into a recession,” Yellen said in Michigan, according to Bloomberg News.

“If it doesn’t hit in a substantial way in the United States, that’s less likely. We had a pretty solid outlook before this happened — and there is some risk, but basically I think the U.S. outlook looks pretty good,” she added.

Updated at 12:20 p.m.