Dow plunges 1,191 points, its biggest one-day point drop, as coronavirus fears escalate

Rising anxiety over the global coronavirus outbreak pushed the stock market into a new zone of fear Thursday.

After falling sharply all week, the Dow Jones industrial average tumbled 1,190.95 points to close at 25,766.64 – its worst one-day point drop in history.

Mounting worries about the virus spreading in the USA rattled investors as the number of worldwide cases topped 82,000. Thursday's losses put the blue-chip average into a correction – a decline of 10% from a recent high – for the first time since December 2018.

The sharp declines wiped out the Dow’s gains for the year and trillions of dollars from investors' portfolios in a matter of days.

"We're in a free fall," says Charles Lemonides, portfolio manager at ValueWorks. "This is the sharpest drop we've seen in a very long time, and I don't know how much longer this could go. It's almost impossible to position your portfolio for this for the next several weeks. You'd be taking ridiculous chances."

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Other major stock indexes also dropped. The Standard and Poor’s 500, the broadest measure of U.S. stocks and the index used as a benchmark for index funds, slid 4.4% to 2,978.76. That landed the index in correction territory as well after a record high Feb. 19. The Nasdaq, which slumped 4.6% to end at 8,566.48, was off more than 10% from its all-time high Feb. 19.

Traders are concerned the global economy could stumble as major industrial countries struggle to contain the outbreak. The U.S. economy remains strong for now, driven by record-low unemployment, a firming housing market and robust consumer spending, which accounts for more than two-thirds of U.S. economic growth.

"No one feels that there's any certainty on how we're going to contain this virus and what the true ripple effects are going to be for the economy," says Jonathan Corpina, senior managing partner at broker-dealer Meridian Equity Partners. "That uncertainty is causing fear in our communities and in the stock market. The fear can only stop when the U.S. government steps up and addresses this."

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The yield on the 10-year Treasury, a closely watched barometer for the U.S. economy, briefly hit a record low, sliding below 1.25% Thursday, down from 1.34%. The yield on the three-month Treasury bill hovered at 1.44%. The inversion in the yield between the 10-year and the three-month Treasurys is a red flag for investors because it has preceded the past seven recessions.

Financial markets have been spooked by concerns the deadly virus will hinder the longest U.S. economic expansion on record, which is approaching its 11th year. Data released Thursday showed the U.S. economy grew at a moderate 2.1% annualized pace in the fourth quarter, the Commerce Department said in its latest estimate.

President Donald Trump announced late Wednesday the United States was stepping up its efforts to combat the virus outbreak. Shortly after Trump spoke, the government announced that another person in the USA was infected – someone in California who didn't have the usual risk factors of having traveled abroad or being exposed to another patient.

Trump said he didn’t believe a pandemic was inevitable, though health officials warned more infections are coming.

“The efforts by Trump to calm the markets are being overshadowed by the news from the CDC of a possible transmission of the virus in the U.S.,” Peter Cardillo, chief market economist at Spartan Capital Securities, said in a note. “We continue to recommend staying cautious.”

Germany’s DAX lost 3.1% and the CAC 40 in Paris dropped 3.3%. In London, the FTSE 100 lost 3.5%. Japan’s Nikkei 225 index lost 2.1% while in Australia, the S&P ASX/200 dropped 0.8%. Hong Kong’s climbed 0.3%.

Contributing: The Associated Press

This article originally appeared on USA TODAY: Dow plunges 1,191 points to record its biggest one-day point drop in history