The sell-off continues.
The Dow, S&P, and Nasdaq Composite fell further this morning, capping off the worst single week for the market since the 2008 financial crisis.
There are now 49 countries with confirmed coronavirus cases after the outbreak spread rapidly in just a matter of weeks. World Health Organization (WHO) officials gave the disease a “very high” risk assessment due to the number of afflicted regions, citing not only the number of infections but the long-term impacts of a true pandemic.
“We have now increased our assessment of the risk of spread and the risk of impact of COVID-19 to very high at global level,” said Tedros Adhanom Ghebreyesus, the WHO’s director-general, in a press conference today.
And though the bulk of cases are still within Chinese borders, globally, the virus is racking up new hosts. The 4,351 confirmed international infections, spread out across 48 nations (28 of which have only reported one case), have given both investors and governments pause.
Thankfully, according to Tedros, “most cases can still be traced to known contacts or clusters of cases.”
He continued, saying that “we do not see evidence as yet that the virus is spreading freely in communities.”
In Northern California, the CDC worryingly reported the discovery of one “community spread” case several days ago. The infection came from an unknown origin, meaning that the person infected did not travel to a region with the coronavirus or knowingly encounter someone who did.
During this morning’s press conference at the WHO’s headquarters in Geneva, Tedros reiterated that the virus could potentially turn into a pandemic.
“Our greatest enemy right now is not the virus itself. It’s fear, rumors, and stigma,” he said.
As well-intentioned as he may be, he and the rest of his agency have done little to quell coronavirus worries since the outbreak began. Instead, statements from health officials have arguably made the panic worse.
Particularly with investors, who continue to sell.
And while “setting the record straight” is certainly important, especially with such a serious disease, the current fallout may be a result of the WHO’s overly casual demeanor early into the outbreak. Back when cases first started appearing in Wuhan, Tedros refused to declare the coronavirus a public health emergency.
He even went so far as to praise the Chinese government for its containment efforts, most of which have failed.
Other health officials echoed the WHO’s sentiment in late January as well. The data from China – if it was to be believed – suggested that the outbreak was under control. Many skeptics believed it wasn’t.
Sadly, they appear to be right.
That’s not to say that the coronavirus will “get us all,” though. It almost certainly won’t.
“If we say there’s a pandemic of coronavirus, we’re essentially accepting that every human on the planet will be exposed to that virus,” said Dr. Mike Ryan, executive of the WHO’s health emergencies program.
“The data does not support that as yet and China have clearly shown that that’s not necessarily the natural outcome of this event if we take action, if we move quickly, if we do the things we need to do.”
The impact on American business, however, is expected to be severe. Yesterday, Goldman Sachs told clients to prepare for “zero earnings growth” in 2020.
Which, much like a full-blown pandemic, might be a little early to declare.
Provided that no other ruinous headlines hit the airwaves next week, stocks seem likely to find a bottom. This is panic selling at its finest, and once health officials get a handle on the outbreak, expect stocks to rise mightily.
Because even though we’re in a coronavirus-driven slump, American corporations will end up doing what they always do in a time of crisis: