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Stocks fell sharply on Monday, with Dow Jones Industrial Average losses reaching 1,000 points. The number of coronavirus cases outside China surged, stoking fears of a prolonged global economic slowdown from the virus spreading.
The Dow traded 1,025 points lower, or 3.5%. The S&P 500 slid 3.5% while the Nasdaq Composite traded 3.9% lower. The 30-stock Dow is also negative for 2020.
Source: (CNBC) Dow plunges 1,000 points, gives up gain for the year
Geebus! One word, "Coronavirus". That says it all.
China has closed most of its factories, and with today's inter-related global supply chains, I was wondering how long can the rest of the world would get by without China's parts & sub-assemblies before there's a spillover effect. It seems today's markets are reflecting my concerns here.
I would keep an eye on the U.S. automakers. Cars are sold as whole functional units. If a part is missing, obviously the car does not sell. And today, American cars integrate parts from all over the world - including China.
Anecdotally, I was contemplating buying a Chinese audio amplifier. The manufacturer's website indicates they are now shut-down and not shipping due to the coronavirus lock-down. Ditto for several other eBay Chinese audio parts online stores I've seen. Making it worse, many online Chinese stores were shutdown for all of January due to the Chinese New Year. And now, the shut-down is extended due to the virus. And again anecdotally, I know a guy that works in international supply chain shipping logistics on the West Coast, that claims his company's business is now doing substantially less than what they normally do.
Yes, my last paragraph is anecdotal. I won't use anecdotal evidence to make an argument. In fact, I'm not making an "argument". But I will opine that I now believe our economy is going to take at least a slight ding here. Maybe only a tick or two in GDP & earnings (maybe more?). But however slight or not, I think we will be effected to some degree.