Local experts explain stocks during Coronavirus outbreak
LAKE CHARLES, La. (KPLC) - The roller coaster ride blamed on Coronavirus concerns continues on Wall Street.
By the time the markets closed on Tuesday, the Dow Jones industrial average was down more than 1,900 points, 6.59 percent over two days, the worst two-day percentage loss in two years.
After two days of big losses, the Dow Jones Industrial Index was up over 400 points early Wednesday, before sliding down to lose more than 120 points. As stocks continue to slide, the big question is if and when we’ll start to feel the financial impact here.
With the spread of the Coronavirus showing no signs of slowing down. Fears of a global recession are ramping up. 7News spoke with a local financial expert to explain how we got here--in addition to one industry that’s already showing early symptoms.
“Houston or New Orleans to Beijing is usually way over 1,000 dollars and now it’s less than 900 dollars”
Experts in the travel industry like Phil de Albuquerque already seeing the signs when it comes to booking vacations for clients. Albuquerque serves as a travel consultant for Travel Partners in Lake Charles.
“I’ve only had a few people cancel or make other arrangements because of the Coronavirus...they’ve said ‘this is what we were going to do next year, so let’s swap it around," said de Albuquerque. "So let’s go to Europe or the Orient next year when everything is settled.”
In China, tourism revenue for the first half of the year will suffer a “severe blow,” affecting overall performance for the whole year, S&P Global said, even if the epidemic is under control by March.
The outbreak coincided with the Lunar New Year holiday season — a peak travel period that S&P Global notes made up 16% of tourism revenue for the first half of 2019.
“These areas have proved particularly vulnerable during this outbreak and highlight the weaknesses in the revenue structure of domestic tourism,” the report said. “Most tourism destinations, hotels, resorts, and theme parks have been temporarily closed.”
With cases of the Coronavirus expanding as far as the Middle East and recently Europe, it’s prompted avid travelers like Angie Dronett to think twice.
“I have a trip planned for May..going to London, Paris, Rome. When I started hearing about cases in Europe..it pretty much put a damper on our vacation," said Dronett.
Stock markets have lost 1.7 trillion dollars in market value in just two days, after news reports that the health scare was widening around the world.
“The basic premise of the market is it reacts to the future," said financial advisor Sam Hebert. "Any little bit of good news the market is going to do better any bad news it’s going to go down.”
Hebert said it’s the fear of the unknown that’s currently plaguing the U.S. With low numbers in the stock market affecting everything from automobiles to Starbucks coffee, iPhones and athletic wear.
“You may have a guy here that grows cattle but the feed comes from a place that is a nest of the issue of Corona,” said Hebert.
Although the story of Coronavirus is still being written, when it comes to the stock market, Hebert says it’s not something we haven’t already seen.
“In the mad cow disease, cattle futures sank,” said Hebert. “We’ve had a lot of different things that make the market swing and go up and down and come back...the markets have been resilient and their history has been to be resilient.”
In another development, the Trump Administration is requesting an additional 2.5 billion dollars in a supplemental budget to fight the Coronavirus. That money would be used to research vaccines and ramp up protective equipment.
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