NEW ORLEANS, La. (WVUE) - COVID-19, a member of the coronavirus family, has U.S. financial markets convulsing.
Stocks fell again on Friday, giving Wall Street its worst week since October 2008 and some local financial experts are not surprised at the financial markets’ reaction to the killer disease.
Tulane Finance Prof. Nishad Kapadia says the global economy affects America.
"I think part of the problem is that the U.S. economy is so globally inter-connected that things that happen across the world impact the U.S,” he said.
Over 80,000 cases of the virus have been confirmed worldwide and fears that the spreading disease will derail the global economy are fueling investment jitters.
Jim Spiro is managing director with Morgan Stanley in New Orleans.
"Some real serious information is being presented to the market and the market is reacting rather violently,” Spiro said.
Kapadia explained what is unnerving the financial markets.
"What markets are fearing right now is not only that U.S. supply chains are interrupted but also that the worst-case scenario is that the virus spreads in the U.S itself and that could cause disruptions to the U.S economy more directly,” he said.
Both Kapadia and Spiro say investors favor certainty. But the coronavirus offers little of that. No one knows how much of it will infect people in the U.S.
"If the situation becomes more serious, particularly here in the United States then I think you would see the response become more vigorous and that might, again, might include places where large volumes of people congregate, so that could include restaurants, it could include sports arenas,” Spiro stated.
And Wall Street is also nervous that the virus could eventually impact the spending habits of Americans.
"Both people not spending enough money because they're nervous about what's happening, new plants not being built, new factories not being built, new businesses not starting up,” added Kapadia.
Wall Street is not just the famed street in New York’s financial district, it is also a term used to collectively describe U.S. financial and investment institutions.
Spiro said some businesses are already feeling a negative impact from the virus.
"You're already seeing some curtailing in the form of a diminution in travel, a diminution in hotel stays, companies that are heavily related to tourism, entertainment, so airlines, cruise ship companies, casinos,” he said.
Spiro also points out that investing is a long game.
"So, I would caution people not to make any rash moves,” he said.