Dow futures drop 750 points as coronavirus cases outside China surge

U.S. stock futures pointed to sharp declines on Wall Street at the open on Monday as the number of coronavirus cases outside China surged, stoking fears of a prolonged global economic slowdown from the virus spreading.

As of 6:35 a.m. ET, Dow Jones Industrial Average futures were down 750 points, indicating a drop of 743 points at the open. S&P 500 and Nasdaq 100 futures were down by 2.5% and 2.9%, respectively.

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Airline stocks Delta and American were both down more than 4% in the premarket while United traded 2.6% lower. Shares of casino operators Las Vegas Sands, and Wynn Resorts dropped more than 3% each. MGM Resorts slid 6.7%.

Chipmakers were also down broadly before the bell. Nvidia shares were down more than 6% while Dow-component Intel traded 3.5% lower. AMD dipped 7.2%. The VanEck Vectors Semiconductor ETF (SMH) was down by 3.6%.

Apple and its suppliers took a hit in the premarket as well. Shares of the iPhone maker were down by 4.6%. Skyworks Solutions and Qorvo dropped 5% and 3.8%, respectively.

The move down came as investors watch developments surrounding the coronavirus outbreak that was first reported in China, but has spread rapidly in other countries especially South Korea and Italy, which reported a spike in the number of confirmed cases in recent days.

On Sunday, South Korea raised its coronavirus alert to the “highest level,” with the latest spike in numbers bringing the total infected to more than 750 — making it the country with the most cases outside mainland China.

Meanwhile, outside of Asia, Italy has been the worst affected country so far, with more than 130 reported cases and three deaths.


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“I’ve now come to the view that equity markets, global equity markets, have to reprice to take into account or fully discount the dramatic economic impact that all of this is going to have,” Jonathan Pain, author of The Pain Report, told CNBC’s “Street Signs” on Monday morning in Asia. “I believe that repricing … has just started and I think it’s gonna be approximately 20% to 25% in the next month or so.”

“I don’t think there’s a letter in the alphabet which adequately describes the profile of the economic shock that … we’re beginning to see,” Pain said. “Of course there will be a recovery at some point in time, however, we don’t know when that point in time is.”

In the earlier days after the outbreak, many economists had predicted a V-shaped recovery, which describes downturns that see a steep fall before recovering sharply. However, traders are loading up on traditional safe havens such as U.S. Treasurys and gold.

The benchmark 10-year note yield fell to 1.397% on Monday, putting the key rate close to it all-time low around 1.36%. Yields move inversely to prices. Gold futures jumped more than 2% to around $1,685 per ounce.

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