Updated at 5:05 p.m. ET
The coronavirus contagion has spread to Wall Street.
U.S. markets fell sharply Monday amid widening concern that the continuing spread of cases could lead to a global pandemic. The Dow Jones Industrial Average tumbled nearly 1032 points, or 3.56% All of the major market indexes were down more than 3%.
Stock markets in Europe and Asia were also down sharply.
"This is not a health pandemic yet, but it's rapidly becoming an economic pandemic," said Diane Swonk, chief economist at Grant Thornton.
Investors are spooked by the growing number of infections outside China, and the possible economic fallout if the epidemic cannot be contained. Growing clusters of coronavirus have been diagnosed in South Korea, Italy, and Iran.
South Korea in particular is a major economic player and a big supplier of components used by manufacturers around the world. The U.S. imported nearly $80 billion worth of goods from South Korea last year. Along with China and Japan, the country is a key supplier of computer and electronics products, fabricated metal products, and machinery.
"We import a fair amount of auto products from South Korea," said Jay Bryson, acting chief economist at Wells Fargo Securities. "If that country were to shut down for any reasonable length of time, then you could have supply chain repercussions here in the auto industry in the United States."
In Italy, the number of reported infections ballooned from just three last week to more than 100, sparking fears of a wider spread in Europe.
"Think about Europe," Bryson cautioned. "Very open borders. And if people are infected in Italy, it could very well spread to other European countries."
Italian authorities responded by canceling soccer matches, closing schools and ordering quarantines in a dozen northern towns.
President Trump offered reassurance after the market closed on Monday, tweeting "The Coronavirus is very much under control in the USA."
Trump wrote that the federal Centers for Disease Control and Prevention and the World Health Organization had been "working hard and very smart," before adding, "Stock Market starting to look very good to me!"
Coronavirus was a main focus of discussion among G20 finance ministers, who held a previously scheduled meeting over the weekend in Saudi Arabia. In a communique, the finance ministers promised to monitor the outbreak, along with other risks to the global economy, and said they are prepared to take additional action as necessary.
Swonk warned the growing outbreak is, "feeding into the fears that people have out there, which is a tax on the global economy itself." She says if those fears trigger lasting changes in behavior, that will make a speedy economic recovery more difficult.
MARY LOUISE KELLY, HOST:
Coronavirus contagion hit the U.S. stock market today hard. The Dow Jones Industrial Average tumbled more than a thousand points. That's more than 3.5%. Investors are spooked by the growing number of infections outside China and the possible economic costs if the epidemic spreads. Clusters of coronavirus have been diagnosed in South Korea, in Italy and in Iran. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Up until now, the U.S. markets had seemed largely immune to coronavirus shocks, but not anymore. Investors were rattled by a spike in the number of cases beyond China's borders. Italy went from just three confirmed cases last week to 124. Italian authorities have now sealed off some of the hardest hit towns near the country's business capital of Milan. They also canceled soccer matches and the last two days of Carnival in Venice. Jay Bryson of Wells Fargo Securities says that may not be enough.
JAY BRYSON: Think about Europe - all right? - it's very open borders. And if people are infected in Italy, it could very well spread to other European countries.
HORSLEY: That's the last thing Europe's already slow-growing economy needs. Diane Swonk, who is chief economist at Grant Thornton, says as other countries work to control the virus, it's likely to further dampen economic activity.
DIANE SWONK: Parts of Korea where they're, you know, telling people to stay in - they're shutting down schools and institutions and plants. It's the same thing in northern Italy now. Parts of northern Italy, they're actually canceling conferences and telling people to stay in.
HORSLEY: Swonk was attending a conference of business economists here in Washington, where the spread of the coronavirus and the resulting stock market plunge were very much on people's minds.
SWONK: This is not a health pandemic yet, but it's becoming rapidly an economic pandemic.
HORSLEY: Some U.S. companies were already feeling the effects of China's massive quarantines, and the spread of the virus will only amplify that. Like China, South Korea is a major exporter, supplying the U.S. with nearly $80 billion worth of goods last year. Bryson says some of those exports are finished products, but others are components used by American manufacturers of electronics, computers and cars.
BRYSON: We import a fair amount of auto products from South Korea. And if that country were to shut down for any reasonable length of time, then you could have supply chain repercussions here in the auto industry in the United States.
HORSLEY: Ford shares were down more than 4% today. Apple shares lost close to 5%. Many forecasters had been expecting a rapid rebound from the economic pain of the coronavirus outbreak, but Swonk now worries it could take longer. With the virus still spreading, she warns businesses, consumers and tourists could make lasting changes in their sourcing, shopping and travelling plans.
SWONK: Combating the outbreak is actually feeding into the fears that people have out there, which is a tax on the global economy itself.
HORSLEY: Numerous business meetings and trade shows in Europe and Asia have already been canceled. That has an immediate toll on airlines and hotels but also a more lingering cost in deals that don't get done. For shoppers and travelers within this country, the fear factor remains fairly muted. Today there have been just 35 confirmed cases of coronavirus in the United States, and only two of those were contracted here.
DAVID KOTOK: So far, in North America, there's been a mild response. People don't walk around wearing masks. They haven't canceled events yet.
HORSLEY: David Kotok is chief investment officer at Cumberland Advisors. He's been saying for weeks that the stock market was underestimating the risk of coronavirus. Today he thinks the pendulum may have swung the other way.
KOTOK: One has to now say, is the market now going to extreme? Is it going to panic?
HORSLEY: Kotok is still cautious about the virus itself. He's the rare person in Florida who actually does wear one of those protective face masks these days. He's bolder, though, about the financial contagion. On a day the Dow was losing more than a thousand points, Kotok was buying stocks.
Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.