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The Coronavirus Outbreak Is Spreading...

Written by Monica Savaglia
Posted January 28, 2020

Concerns continue to mount as the number of coronavirus cases increases daily and the area of infection widens. As of Monday morning, 82 people have died and more than 2,700 cases have been confirmed in mainland China. 

The disease is spreading throughout Asia. Here in the United States, there are at least five cases that have been confirmed. On Monday, the U.S. Centers for Disease Control and Prevention (CDC) said that there have been no new confirmed cases of the coronavirus in the U.S. since the last update on Sunday. 

Nancy Messonnier, the director of the CDC’s National Center for Immunization and Respiratory Diseases, notified the public that the CDC is investigating 110 possible cases in 26 states. Messonnier had this to say during a conference call on Monday:

We understand that many people in the United States are worried about this virus and how it will affect Americans. Every day we learn more, every day we assess to see if our guidelines or our response can be improved.

The coronavirus is being compared to the 2003 outbreak of SARS, which had a short incubation period of two to seven days. The large family of coronaviruses usually infects animals but can spread to humans. Symptoms in humans include fever, coughing, and shortness of breath which can eventually progress to pneumonia. 

As of right now, the World Health Organization (WHO) hasn’t declared a global health emergency, but the situation is being monitored heavily. Not keeping an eye on the outbreak of this virus would be detrimental to the world. WHO’s director-general is set to meet with government and health officials in China to analyze data to determine if the virus is a worldwide emergency.

China has restricted travel to prevent the spread of the virus. City officials in Wuhan, China, the epicenter of the outbreak, have put its population of about 11 million people on lockdown to contain the disease and prevent further transmission in the region.

Researchers have discovered that it may be possible for people who are infected to spread the virus before they have any visible symptoms. U.S. officials say symptoms from the new virus, which they have temporarily named 2019-nCoV, can take up to 14 days to appear. 

The CDC is working hard at speeding up testing and getting those tests in the hands of state health officials. Currently, it’s taking the CDC four to six hours to make a diagnosis when a sample makes it to its lab. It is flu season, which means the flu and other respiratory illnesses could result in officials not accurately identifying more cases. A lot could go wrong if the necessary precautions aren’t taken in this delicate matter, with implications that could be felt throughout the world. 

Stock markets are being affected by the spread of the coronavirus. On Monday, the Dow futures fell around 1.6%. There was also a 1.6% drop in the S&P 500 futures. And Nasdaq futures lowered by about 2.1%. 

Concerns are lingering in the market. Travel stocks like American Airlines Group (NASDAQ: AAL) fell more than 8% Monday morning, and Delta Air Lines (NYSE: DAL) experienced a drop in its shares as well. 

Analysts at Dutch bank Rabobank said, “As the human cost continues to rise, investors have become increasingly concerned about the potential economic consequences of the disease.”

Carnival (NYSE: CCL) and Royal Caribbean (NYSE: RCL) experienced about a 5% drop when the market opened up on Monday morning. Investors are holding off on travel stocks until there is a better understanding of exactly how dangerous this virus will get. 

China accounts for about 5% of the global cruise capacity and is the high-end go-to destination location for cruise lines like Carnival and Royal Caribbean. If cruise lines are canceling trips and port calls in countries affected by the spread of the virus, that’ll reflect in the companies’ first-quarter earnings. That could mean bad news for long-term growth.

However, there are some stocks that have been seeing movement with the news of the coronavirus. Biotech stocks, even the ones that haven’t been directly related to the outbreak, have experienced an uptick. Either way, the sector has been rising and some companies have publicly announced  they are working on a vaccine and assisting with quicker detection. 

Let’s take a look at one unlikely biotech, Vir Biotechnology, a clinical-stage immunology company that surged 38% because of the coronavirus. 

This rally began on Thursday last week when the company made the announcement that it’ll be “working to rapidly determine whether its previously identified anti-coronavirus monoclonal antibodies (mAbs) bind and neutralize 2019-nCoV." Vir’s CEO, George Scangos, Ph.D. said, “We don’t know yet if these efforts will be successful, but we are working aggressively to find out.” 

This is just one example of how biotech companies are doing what they can to help control the virus. The biotech sector tends to experience massive gains that many people are unaware of. It’s a breakthrough industry with amazing potential. The sector often intimidates investors because it requires a lot of attention, but that doesn’t have to be the case, especially at a time when biotechs are working fast to develop a vaccine and dedicating their resources to containing the spread of the coronavirus. 

Watch this presentation on the biotech sector. It’ll give you insight into how to be on the lookout for events that could easily help build your wealth

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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