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U.S. Stocks Fall Sharply Amid Worries About Coronavirus Spread

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Stocks moved sharply lower during trading on Monday, extending the notable pullback seen over the two previous sessions. With the steep drop on the day, the Dow ended the session at its lowest closing level in well over two months.

The major averages remained firmly negative throughout the session after an initial nosedive. The Dow plunged 1,031.61 points or 3.6 percent to 27,960.80, the Nasdaq plummeted 355.31 points or 3.7 percent to 9,221.28 and the S&P 500 tumbled 111.86 points or 3.4 percent to 3,225.89.

The sell-off on Wall Street reflected concerns about the spread of the coronavirus amid a spike in the number of confirmed cases outside of China.

South Korea announced a total of 231 new coronavirus cases earlier today, leading the government to raise the coronavirus alert to its highest level.

A jump in confirmed coronavirus cases in Italy as well as new cases in Middle East countries like Iraq and Afghanistan also added concerns about the outbreak escalating into a pandemic.

The World Health Organization said it is worried about the growing number of cases without any clear link to China.

Traders shrugged off concerns about the coronavirus earlier this month, helping propel stocks to new record highs amid optimism the outbreak would quickly be contained.

However, the continued spread of the virus along with several companies warning about the financial impact seems to have traders reassessing their positions.

Energy stocks turned in some of the market's worst performances on the day, moving sharply lower along with the price of crude oil. Crude for April delivery plunged $1.95 to $51.43 a barrel amid concerns about the outlook for demand.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 7.2 percent, the NYSE Arca Oil Index tumbled by 5 percent and the NYSE Arca Natural Gas Index dove by 4.2 percent.

Worries about global demand also contributed to substantial weakness among steel stocks, as reflected by the 4.7 percent nosedive by the NYSE Arca Steel Index. The index fell to its lowest closing level in over four months.

Semiconductor, computer hardware, brokerage and transportation stocks also saw significant weakness on the day, reflecting broad based weakness on Wall Street.

Meanwhile, gold stocks were among the few groups that bucked the downtrend, with the NYSE Arca Gold Bugs Index climbing by 1.5 percent to its best closing level in well over three years.

The strength among gold stocks came amid a spike by the price of the precious metal, as gold for April delivery soared $27.80 to $1,676.60 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved significantly lower during trading on Monday. Hong Kong's Hang Seng Index tumbled by 1.8 percent, while South Korea's Kospi plummeted by 3.9 percent.

The major European markets also showed substantial moves to the downside on the day. While the U.K.'s FTSE 100 Index showed a 3.3 percent nosedive, the French CAC 40 Index and the German DAX Index both plunged by 4 percent.

In the bond market, treasuries moved sharply higher, benefiting from their appeal as a safe haven. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 9.4 basis points to a three-year closing low of 1.377 percent.

Looking Ahead

Coronavirus news is likely to remain in focus on Tuesday, potentially overshadowing reports on home prices and consumer confidence.

On the earnings front, retailers Home Depot (HD) and Macy's (M) are among the companies due to report their quarterly results before the start of trading on Tuesday.

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