Stock market rout deepens on virus worries; Dow falls 4%

"Sometimes the faster it goes down, the faster we get a pop-up"

WBEN Newsroom
February 27, 2020 - 7:05 pm
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NEW YORK (AP/WBEN) - The Dow Jones Industrial Average has tumbled nearly 1,200 points, deepening a week-long global market rout caused by worries that the coronavirus outbreak will wreak havoc on the global economy.

Thursday's session was the market's worst one-day drop since 2011. The S&P 500 has now plunged 12% from the all-time high it set just a week ago. That puts the index in what market watchers call a “correction.” The index is headed for its worst week since October 2008, during the global financial crisis. Bond prices soared again as investors sought safe places to park money.

While this week has been especially bad, Financial Guys President Mike Lomas says he almost prefers this kind of decline as opposed to a more drawn out alternative.

"What I do like, and I know this sounds a little bit crazy, but we've had some really, really, bad days here, and typically when you have really bad days in a row, sometimes it's like ripping a Band-Aid off," said Lomas. "Instead of seeing the slow grind down on a bear market where it slowly moves down 10%-15%, sometimes the faster it goes down, the faster we get a pop-up."

When asked point-blank if he has concerns or reservations about the long-term stability of the market, Lomas said he doesn't. He also added that this kind of market volatility can actually present a unique buying opportunity for some investors.

"At some point, you'll see the buyers come in, and they're going to say, 'Wait a minute - you're telling me I can buy a really good company 15% or 20% cheaper than it was the week before, and yeah, we have this coronavirus out there, but I think long term it's not going to be here five years from now, but I do think this company is going to be here, and I think earnings are going to be considerable higher, and because of that I'm going to buy it now,'" said Lomas.

"I think that's part of our job - to take the emotion out of it," he continued. "Nobody likes to see this, right? Nobody likes to see the Dow down 800 and 900 points...but to me, when I see down markets, I think it's one of the only things in the world that when things go on sale, many folks don't want to take advantage of it, and I don't want to lose sight of that. When things are on sale and I like the product, I'm going to buy it. If it get's cheaper, I'm going to buy it again, and that's what we're looking at with the market."

Listen to Lomas' full comments below:

Asian stock markets fell further Friday on spreading virus fears, deepening an global rout after Wall Street endured its biggest one-day drop in nine years.

Tokyo's benchmark fell by an unusually wide margin of 3.4% and Shanghai, Hong Kong and Seoul all dropped by more than 2%. Oil prices slumped further on expectations industrial activity and demand might decline.

Investors who had been confident the disease that emerged in China was under control have been jolted by outbreaks in Italy, South Korea and Iran. They worry the virus is turning into a global threat that might derail trade and industry.

On Wall Street, the benchmark S&P 500 index is down 12% from its all-time high a week ago.

A growing list of major companies are issuing profit warnings and say factory shutdowns in China are disrupting supply chains. They say travel bans and other anti-disease measures also are hurting Chinese consumer spending.

Virus fears “have become full-blown across the globe as cases outside China climb,” said Chang Wei Liang and Eugene Leow of DBS in a report.

Tokyo's Nikkei 225 tumbled to 26,157.36 while the Shanghai Composite Exchange lost 2.9% to 2,904.92. Hong Kong's Hang Seng lost 2.3% to 26,157.36.

The Kospi in Seoul fell 2.2% to 2,007.89 and Sydney's S&P-ASX 200 sank 2.3% to 6,502.6. New Zealand and Southeast Asian markets also retreated.

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