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Stocks drop amid uncertainty over novel coronavirus impact

Stocks plunged on Wall Street as investors feared that a virus outbreak that originated in China will dent the global economy. Technology companies, which do a lot of business with China, led the losses. Airlines fell after Delta and American suspended flights to and from China.

The sell-off erased the S&P 500’s gains for January and gave the benchmark index its biggest weekly loss since August. The S&P 500 sank 58, or 1.8%, to 3,225. The Dow Jones industrials fell 603, or 2.1% to 28,256. The Nasdaq dropped 148, or 1.6%, to 9,150. Bond prices rose. The yield on the 10-year Treasury fell to 1.51%.

The Dow Jones Industrial Average slumped more than 600 points Friday as a virus outbreak that originated in China continued to widen, stoking stock investors’ worries about the potential global economic fallout.

The broad sell-off erased the S&P 500’s gains for January, which began with the market benchmark at record highs. The index is on track for its second weekly loss and its biggest weekly decline since early August.

The virus has infected almost 10,000 people globally in just two months, a troublesome sign of its spread that prompted the World Health Organization to declare the outbreak a global emergency. That designation signals that the virus is now a significant risk to other countries and requires a global response.

READ MORE: How novel coronavirus could affect the global economy

Cases have spiked in China, along with deaths there, and the U.S. is now advising against all travel to the world’s second-largest economy. The move weighed on airline and energy stocks. It also helped push oil prices lower.

American Airlines fell 3.2% and Delta Air Lines slipped 2.4% after both companies suspended flights to and from China.

“The economic and market impact now are becoming much more significant and those two sectors are probably the most important to keep an eye on,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “If you’re going to restrict travel and you’re going to restrict movement, you’re by default going to hit energy prices.”

Technology stocks led the losses. Apple, which relies on Chinese consumers for sales and factories for supplies, fell 3.9%. Nvidia slid 3.8% and other chipmakers slipped.
Banks and energy companies also broadly fell. Exxon and Chevron both fell after issuing fourth-quarter results.

Bond prices rose. The yield on the 10-year Treasury fell to 1.51% from 1.55% late Thursday. In another sign of how much fear is in the market, the yield on teh three-month Treasury rose above the 10-year yield, a relatively rare occurrence that hasn’t happened since October. Investors see such inversions as a fairly reliable warning signal of a recession within a year or so, though its track record isn’t perfect.

Amazon was a standout as a stellar earnings report helped push its market value to slightly more than $1 trillion. Colgate-Palmolive and other makers of household goods held up better than most of the market, as did utilities.

The S&P 500 index fell 1.9% as of 3:27 p.m. Eastern time. The Dow fell 624 points, or 2.2%, to 28,234. The Nasdaq fell 1.6%. The Russell 2000 index of smaller company stocks fell 2%.

The S&P 500 had been off to a solid start for the year until concerns about the virus stunted it. The technology-heavy Nasdaq is also on track for its second straight weekly loss, though it is still holding on to gains of 2.1% for January.

European markets closed broadly lower. The United Kingdom is officially leaving the European Union later Friday after more than three years of wrangling over the terms of its exit. It’s the first time a country has left the trading bloc.

Markets in Asia finished mostly lower, though Japan’s Nikkei 225 rose 1%. Indexes in mainland China open on Monday after an extended shutdown of more than a week for the Lunar New Year. A lot of pent-up selling has likely built up in the meantime.

AP Business Writers Damian J. Troise and Stan Choe contributed to this report.