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Ebola scares Wall Street

3:34am IST - 02:12

Stocks were knocked off their feet with small caps now down 10 percent from their record high as a U.S. confirmed case of Ebola sparked weakness in travel and tourism stocks that spread. Conway G. Gittens reports.

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Stocks nose-dived as the first diagnosis of Ebola in a patient in the United States gave investors a reason to worry. The selling was indiscriminate - but small caps, seen as most risky - were pummeled. The Russell 2000 small cap index is now down about 10 percent from its all-time closing high. David Kotok of Cumberland Advisors: SOUNDBITE: DAVID KOTOK, CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS (ENGLISH) SAYING: "I think the market is highly valued and it's highly valued because of zero interest rates. When you introduce and sustain zero interest rates over and over and over and over for years, you distort valuation methods, you distort markets, you suppress risk premium, you dampen volatility and now that's changing. And so I think there is a risk of a correction. I maintain cash reserves frequently and run into them as soon as I see a ripple." The Dow, the S&P 500 and the Nasdaq all fell a full percent with sellers not letting up. Worries that an Ebola scare will scare off travelers, especially travelers to the U.S., put travel and tourism stocks at the top of the losers list. Airlines like Delta, American, United Continental, and even domestic carriers like JetBlue and Southwest down sharply. Hotels and travel websites took a hit as well. To name a few: Starwood, Marriott and Expedia - some of the biggest losers in the S&P 500. On the flip side, drug companies with Ebola treatments in the pipeline rallied. U.S. shares of Tekmira, Sarepta Therapeutics and BioCryst were all up for the day. On the economic front: domestic auto sales cooled in September from their torrid pace this summer, factory activity slowed to its lowest since June and employers added 213,000 jobs -, just above economists' expectations, according to payrolls processer ADP. Construction spending rebounded strongly to hit its highest level in more than 5-1/2 years in July. In Europe, stocks finished lower on disappointing manufacturing data and concerns about earnings.

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Ebola scares Wall Street

3:34am IST - 02:12

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