SPREAD OF CORONAVIRUS RESULTS IN MARKET UNCERTAINTY

Story by WVUA 23’s Kayla Smith.

On Monday, the S&P 500 witnessed its worst single-day drop in almost 12 years.

As new cases of the coronavirus pop up across the United States, the market reflects national uncertainty.

“The market likes certainty and still right now no one knows what’s going on with this virus,” said Dr. Lars Powell, the Director of the Center for Insurance Information and Research at the University of Alabama.

According to Powell, the market will respond as disease parameters change.

“There’s kind of this balancing act we have to play where it’s going to run its course; some number of people are going to get it, and some people aren’t,” Powell said. “The faster we can know that, the more certainty we have for the markets, but if we get there too fast it’s going to cause some problems in the other direction.”

Powell said that while the recent market fluctuations seem dramatic, he believes that as more information about the virus becomes available the market will begin to recover, but in the short term, Americans might face shortages and delays.

“A lot of these plants in China are shutting down for a quarantine period and not making anything,” Powell said. “That’s going to cause an increase in demand and a decrease in supply and so maybe you’ll see some shortages in the market for things like cars and appliances.”

Alabama has two coastal counties with a cruise ship market that might be impacted, and an automotive manufacturing industry that might see some delays.

Additionally, Powell said that local companies should be cautious about some of the ways they are moving business online and decreasing face-to-face contact.

“To the extent that your company is going to go to a virtual office or having people work remotely, this is a great time to check with your IT security staff because if everyone is doing business on their computer instead of face to face, that’s a whole new set of risks,” Powell said.

Without a clear a plan to contain the coronavirus, the nation faces an uncertain economic future.

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