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Stock Market Declines as Coronavirus Spreads

Emily Ness
Updated: February 26, 2020 08:29 PM

As the coronavirus continues to circulate across the globe, its impact can be seen in declines in the stock market.

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The Dow closed down another 124 points Wednesday—a smaller loss than Monday and Tuesday, but it still marked the third day of losses. NASDAQ made a slight gain Wednesday, but the S&P 500 showed a slight loss. Experts say these declines are the result of quarantines and limits on travel in and out of China preventing business from being conducted as usual.

Jason Turkiela, Assistant Professor of Finance at UMD said although the ultimate impact of the coronavirus on global economies remains up in the air, concerns are heightened now that the virus is no longer contained to mainland China.

“This is going to be sword that cuts both ways. To a large degree, yes the market is probably going to be spooked by the coronavirus,” Turkiela said. “But, there is this sort of old axiom that from a value investing standpoint, you buy when there’s blood on the streets, when everybody else is panicking and everybody else is getting scared, that’s the perfect time to pop into the market and find a good buying opportunity because prices will be low.”

According to Turkiela, the number of stocks that could be impacted is large because so many businesses today have a worldwide presence.

“Most of the corporations that we invest in, you know, the companies that you can think of off the top of your head—they all have operations all over the world so when something happens in one corner of the globe, it all of a sudden has a large impact on your bottom line. Practically any company that has international exposure which is the vast majority of them nowadays is going to be effected by this,” Turkiela said.

In his Financial Modeling and Evaluation class, Turkiela is working with a student doing a project on Chinese company. He said that the student has run into some challenges getting information.

“The Chinese government themselves is prohibiting their company from producing financial information—again to not stoke the fears around the virus, they’re actually saying you guys cannot release sales figures, you can’t release cost figures cause you might end up spooking a lot of people about how bad things are,” Turkiela said.

It is unclear when this downward spiral in global stocks might end. Turkiela said the best thing to do is keep an eye on it and adjust accordingly.

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Emily Ness

Copyright 2020 WDIO-TV LLC, a Hubbard Broadcasting Company. All rights reserved

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