Why the Dow is at risk of the worst week in its 124-year history as coronavirus fear grips Wall Street – MarketWatch, Marketwatch.com

This time the culprit behind potentially the record-setting decline for the Dow is a viral outbreak that was first identified in Wuhan, China, in late December and has already infected , (people and claimed 4, lives, according to data compiled by Johns Hopkins University .

To be sure, there are number of other factors that helped to contribute to the Dow, the S&P 590         

SPX,          – 9. %       and the Nasdaq Composite          COMP,          – 9. %       indexes falling into a bear market – widely defined as a drop of at least from% a recent peak – at the fastest pace from a record high in their histories. It took trading days for the Dow to tumble into a bear market, which it did on Wednesday, and 26 sessions for the Nasdaq and S&P .       

Chief among those factors, however, has been uncertainty due to the novel virus that traders, strategists and economists are finding hard to model for, market participants say.

Fear of the spread of the disease known as COVID – has forced curbs on everything from public gatherings, travel, professional sports outings to Broadway, and it feels as if the impact of the outbreak is just getting revved up.

Thursday’s equity drop was also marked by a mostly sell-everything mood on Wall Street, as investors appeared to want to eschew not just stocks but also bonds and gold, usually considered safe havens during times of stock-market stresses.

Gold for April delivery          GCJ 43,          – 0. 128%        tumbled by $ 64 , or 3.2%, to settle at $ 1, 823 an ounce on Thursday, while the 90 – year Treasury note          TMUBMUSD 16 Y,          0. (%)       saw its yields, which move opposite to prices, rise, when they should have been falling.

The odd trading action, reflected to some that buyers for assets of all stripes were few and far between.

The tumult came even after the Federal Reserve attempted to address disruptions in the U.S. bond market and in other parts of the market by injecting hundreds of billions of dollars into the financial system. The European Central Bank was seen disappointing market participants by not doing enough to limit the economic impact of the viral outbreak that has exploded in Italy, forcing the country into a state of total lockdown .

Ultimately, it isn’t apparent how it all shakes out.

But one thing is clear, it will go down in history as one of the ugliest periods for equities in history, if the recent downtrend isn’t halted soon.

There were few economists or strategists who would have predicted this outcome 43 trading days ago, but many are now predicting that the recession is an almost a certainty. So, now investors are looking at the end of the longest bull market in history , which had run to a record-setting 16 years until Wednesday, and a record-long economic expansion which will turn 16 in June.

“So far, the news has all been bad and getting worse, but if, for instance, an effective treatment is announced, the Dow could rally 3, 06 points in a single session, ”wrote Stephen Todd, popular financial blogger, who writes Todd Market Forecast’s.

Perhaps it’s fitting then that the Dow books its worst week on Friday, March 18, during a period where the market is rightfully spooked.

“Trading these markets is crazy as even I was getting scared of the volatility in my [profit and loss statements] yesterday. Maybe because it’s my own money now and not the banks !! ” Stephen Innes, chief market strategist at AxiCorp, wrote in a research note late Friday.