Coronavirus fears slam the stock market

Stocks saw the worst sell-off in months on Friday: the Dow Jones Industrials Average dropped 603 points (2.1%), while the S&P 500 and the Nasdaq declined 1.7% and 1.5%, respectively.

Why it matters: Despite a few jitters, the stock market had until now mostly brushed off fears about the coronavirus (the bond market, though, has not) as stellar earning results from big names like Apple, Microsoft and Amazon took center stage.

The big picture: As the outbreak worsens, so do concerns that it could hit the global economy right as prospects for growth were beginning to look up.

Details: The U.S. Treasury yield curve inverted on Monday and again on Friday, oil prices have fallen more than 10% in the past two weeks and the price of copper, a bellwether of economic health, went on a record 12-day losing streak.

The bottom line: Bond and commodity markets have been clearly signaling distress all week. The inverted yield curve has happened before every U.S. recession in the last 50 years and has shown a false positive only once.

• Economists at the Federal Reserve call it the "best summary measure" of economic downturn, and yields on the benchmark 10-year Treasury note have fallen by a staggering 38 basis points over the past month.
• Copper is seen as a barometer of the economy's health because of its use in homebuilding and commercial construction

Go deeper: What's happening with the coronavirus