HARRISBURG, Pa. (WHTM) — Coronavirus isn’t just affecting people’s health, it’s also taking a toll on the stock market.
On Thursday alone, the Dow Jones plummeted nearly 1,200 points, which was the biggest one-day point drop ever. So far this week, it’s plummeted more than 3,000 points, or about 11-12% off recent highs.
An investment expert provided insight on why this happening, and what it could mean.
Bob Caplan, an investment advisor with River Wealth Advisors, said what we are seeing right now is a market sick with uncertainty.
“When there are unknowns like this that happen, they create tremendous selloffs,” Caplan said. “It has kind of a domino effect on the whole economy.”
According to Caplan, Coronavirus concerns are already rolling back projections of how companies will fare over the next year.
“We’re already seeing profits, estimated profits being rolled back,” Caplan said. “People just start selling because they don’t wanna wait around to find out what the truth will be, they’d rather have cash.”
American auto and tech industries in particular are feeling the pinch, since they get a variety of parts from China, fueling worry that supply chains may be impacted.
Airlines, Caplan said, are also soaring — but in the wrong direction.
“Concern of people flying anywhere and being exposed to a virus like this is reducing the amount of people on planes and in turn putting pressure on stocks,” Caplan said. “American Airlines, United Airlines, Delta, and even airlines that are more domestic like Southwest or Spirit, their prices have been dramatically hit.”
American Airlines stock, is down more than 9% since February 12, while United and Delta stocks are down more than six percent.
Goldman Sachs experts said in a report Thursday that “a more severe pandemic could lead to a more prolonged disruption and a U.S. recession.”
But Caplan said it isn’t time to panic, yet; there is some good news.
“Being invested in stocks after these tremendous drops, are incredibly profitable,” he said. “You gotta keep looking forward and not focus on the panic du jour, but focus on your long-term plan. There should be some comfort in looking back at history, that these values do come back up.”
He said that rebound is likely, but it’ll take time. The focus now, he believes, should be on your future goals.
“It is absolutely not a time to go out and sell what you have,” Caplan advised. “When things are unknown, the market is gonna react with firm vigor. Things will return to the growth model that we’ve been in.”
Caplan said positive news from the major epicenters of this virus, along with fewer cases, will eventually help to create confidence in the market, as will any treatments. But federal health officials said Wednesday during President Trump’s press conference that any potential vaccine is still a year or more away, as rigorous testing and trials must come first.