U.S. markets began Friday with gains, but after the U.S. Center for Disease Control confirmed the second case of coronavirus in the U.S. markets tanked, falling sharply with broad-based losses.
By the end of the trading day, the small-cap Russell 2000 was the worst-performing index as it fell 1.4%, while the S&P 500 and Nasdaq both lost 0.9%. The Dow Industrials was the best performing major U.S. index, but it still finished the day 0.6% lower.
The second coronavirus case in the U.S. was confirmed in Chicago and was a woman who had recently returned from travel in Wuhan, China. The CDC continues to monitor 63 other possible coronavirus cases in the U.S.
Some analysts have recently been warning that an external event could spark a correction in the U.S. equity markets, which have continued making record highs throughout 2019 and into 2020.
With the Federal Reserve already pumping liquidity into markets to keep them both stable and elevated, the timing of the coronavirus outbreak could hardly be worse. With the increasing possibility of the virus outbreak becoming a global emergency, U.S. investors are faced with a risk off-market and sliding stocks.
That risk-off posture also hit crude again on Friday, with U.S. West Texas Intermediate falling 2.5% for a weekly loss of 7.5%. Crude traders are worried the spread of coronavirus will also hit the global economy, slowing demand for crude.
Gold is the one asset class benefitting from the current risk-off sentiment, with the yellow metal rising 0.4% on Friday to post a weekly gain of 0.7%.
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