Summary: Stocks needed an excuse to pull-back. The media storm and negative feedback loop around coronavirus have proven to be just the trick. Our view: Don’t change your investment strategy. The DJIA dropped 12% last week. The severity of the sell-off is due to three factors. First, stocks were extended following the recent resolution of uncertainty on trade disputes with China. Second, financial and other media have stoked fear by massively amplifying reporting and risk around the threat of coronavirus. Lastly, companies and industries are experiencing a real negative impact from reduced consumer spending, travel, and disrupted supply chains. Earnings will be lower than previous estimates.
