DAVID GREENE, HOST:
Stocks have opened lower in Europe this morning after a big rout in U.S. stock markets. They also fell sharply in Japan. The Dow Jones Industrial Average fell by more than a thousand points yesterday, its worst performance in more than two years. The markets tanked amid news that coronavirus cases have been reported in Italy and Iran, also in South Korea. We're joined now by NPR's Jim Zarroli. Hi, Jim.
JIM ZARROLI, BYLINE: Good morning, David.
GREENE: So this coronavirus has been spreading for weeks now. I mean, we talk about it, you know, just about every day. Why are the markets suddenly reacting like this?
ZARROLI: I think the reports about the cases in South Korea and Italy really scared everybody, scared investors. Remember - the epidemic started relatively slowly in China, and then it just mushroomed. So there are fears that we might be seeing the same kind of progression starting in other places. For instance, Italy is part of a big continent where everybody moves around freely all the time. So an outbreak there could really spread quickly all over Europe, which is the second-largest U.S. trading partner, and that would be an economic disaster, too, as well as a health disaster.
GREENE: Well, let's talk about the potential economic effects here. I mean, what is it specifically that might be spooking investors when it comes to a health crises like this?
ZARROLI: You know, we live in a global economy, and so what happens in one place affects people in other places. China, of course, is a huge manufacturing country. It has all these supply chains that are linked to other economies all over the world. Now we have enormous quarantines taking place there. You know, factories are shut down. People can't go to work. So if you're a manufacturing or a retailer in the U.S. or other countries who depends on China - Chinese or South Korean suppliers, suddenly you don't know how you're going to get the parts you need to stay in business.
Apple, for instance, has already said it expects to see a shortage of parts for the iPhone because its factories in China are shut down. So this just has the potential to kind of sideline a lot of other companies.
GREENE: I mean, you mentioned Apple, and we've been reporting on some of the impact on the economy so far. But what else is standing out to you?
ZARROLI: Well, you know, we're hearing anecdotal evidence of this - a lot of companies say they're worried about inventories getting low. We're starting to see some actual numbers, too. Airlines, for instance, are among the companies that are getting hurt really badly. Yesterday, United Airlines said it had seen a 75% drop in demand for flights to Asia. So we can expect this will get worse before it gets better. Over the weekend, Chinese President Xi Jinping said the epidemic will have - he called it a, quote, "relatively big impact on the economy and society," although he added it will be short term and controllable.
GREENE: So should you worry if you have your money, like, in a retirement fund or - you know, that involves stocks?
ZARROLI: Yeah, I mean, that's always the question. It's really hard to predict where this epidemic is going, how big it's going to be. So a lot of it will depend on that. On the other hand, we've seen the stock market deal with a lot of very troublesome developments lately, like Brexit and the trade war, and it always seems to come back eventually. So, you know, it's resilient.
GREENE: We'll have to stop there, Jim. NPR's Jim Zarroli. Jim, thanks so much.
ZARROLI: You're welcome.
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