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'Fear of the unknown' causing unrest on Wall Street

Posted at 6:13 AM, Mar 10, 2020
and last updated 2020-03-10 08:30:03-04

COLORADO SPRINGS — The Coronavirus (COVID-19) outbreak has rocked the global economy and financial markets. Monday morning, the Dow Jones Industrial Average plummeted 2,000 points, or roughly 6%. Financial experts say this drop we're seeing is the result of fear of the unknown.

COVID-19 is spreading around the world, and many investors can't put their finger on how much this will hurt the economy, creating chaos in some markets.

The travel and tourism industries are facing their worst crisis since the 2001 terrorist attacks.

This week, the International Air Transport Association warned that the outbreak could cost airlines as much as $113 billion in lost revenue.

As business travel is falling, trade shows, music festivals and conventions are being canceled all over the country.

Cruise prices are beginning to fall after two high-profile quarantines. The Grand Princess was being held off the coast of California, with at least 21 infected people aboard, before docking in Oakland.

With all of the uncertainty, one financial advisor says there is a way to predict the future of the stock market. Just look at the past.

"We've had 12 health events since 1981, starting with the HIV/AIDS outbreak, then SARS, Zika, and Ebola," said Guy Harris, a financial advisor with Edward Jones Financial. "In 11 of those 12 cases we've had the market rebound in three to six months."

Harris says he's had to address about a dozen of his clients concerns involving their stock, and other financial dealings.

Another industry to keep an eye on is the oil industry. According to AAA, the cost of oil sank 20 percent, thanks to a pricing fused between Russia and Saudi Arabia. The cost for a barrel of U.S. cruse is now below $34.

Experts say falling oil prices are usually good for business. In times of economic concern or unrest, oil prices are often used to measure the global economy overall.

"In most cases, people are just concerned that this is going to be an extended downturn like in 2008. I think that's unlikely," Harris explained.

The coronavirus funding bill was signed into law by President Trump on Friday. It's a $8.3 billion dollar plan to combat it the spread of COVID-19. There is talk on Capitol Hill, that lawmakers could be looking to add more to curtail the economic impact.