Ebola fear factor subsides in U.S. financial markets

Alpha Pro Tech

20/10/2014 23:34

By Yasmeen Abutaleb 
    NEW YORK, Oct 20 (Reuters) - Investors should expect more 
calm to return to U.S. equity markets after some of the most 
volatile trading since 2012 as the 21-day incubation period for 
Ebola passes for many in Texas without new infections. 
    The market's big losses last week were largely attributed to 
concerns over global growth and plummeting oil prices. But fears 
that Ebola could spread in the United States after three people 
in Dallas were diagnosed with the hemorrhagic fever added more 
than a little froth to the market's recent convulsions. 
    By Monday, however, it was evident that investors were 
growing more sanguine over the Ebola threat as 43 people who 
came into contact with an Ebola-infected patient in Dallas 
cleared the 21-day incubation period for the virus. 
    "It was a short-term scare," said Howard Simons, president 
of Rosewood Trading in Chicago. 
    Several of the stocks that got hit hardest by the fear - 
including airlines and hotels - bounced back sharply on Monday. 
Just as notably, several stocks that rode the scare higher, such 
as hazmat suit maker Lakeland Industries Inc  LAKE.O  and 
Tekmira Pharmaceuticals Corp  TKMR.O , which is testing a drug 
to treat the virus, fell by more than 30 percent over the past 
three sessions after rising over 200 percent. 
    "Anybody who's buying some sort of panic-related stock paid 
too much and that's that," Simons said. "You do stupid things; 
you lose money."  
    Panic over a possible Ebola outbreak in the United States 
escalated after a Liberian man became the first person in the 
United States diagnosed with the virus on Sept. 30. Two of the 
nurses caring for him, Nina Pham and Amber Vinson, also 
contracted the virus, and Vinson flew on a commercial flight one 
day before she was diagnosed.  ID:nEBOLATAL  
    A cruise ship was denied docking by Belize and Mexico last 
week because a Texas hospital lab worker on board might have 
come in contact with test samples from the Liberian man, who 
died on Oct. 8. The worker has tested negative for the virus. 
     
    KEEPING AN EYE ON THE CALENDAR 
    The relatively long incubation period for the disease is 
prompting a focus on the calendar, with early November being 
seen as a likely time for an all-clear for the United States as 
long as no new cases emerge. 
    A person can become infected with Ebola up to 21 days after 
initial exposure to the virus. About 260 people in Texas and 
Ohio are still being monitored.  ID:nL2N0SF0LZ  
    "Going into the market today, there seemed to be somewhat of 
an easing of Ebola tension," said Jack Ablin, chief investment 
officer at BMO Private Bank in Chicago. 
    "While it certainly was a contributor to volatility and 
concern, we did have some easing both in Dallas and on the 
cruise ship. I think some of those fears have subsided a little 
bit." 
    Shares of Lakeland fell 12 percent on Monday and 37 percent 
in the past three sessions, following a 248 percent gain in the 
seven-session period to last Monday. 
    Alpha Pro Tech  APT.A , which makes disposable protective 
apparel, fell 47 percent in the past three sessions. In the five 
sessions to last Monday, it had gained 219 percent. 
    Tekmira Pharmaceuticals traded earlier this month almost 240 
percent above the July low of $8.86. On Monday, it lost 14.5 
percent to $18.61. 
    On the flipside, airliner and cruise ship shares have 
bounced back. American Airlines  AAL.O  rose as much as 26 
percent from a nine-month low hit last week and the Dow Jones 
Transportation Average  .DJT  rose nearly 7 percent from a 
five-month low hit Wednesday. 
    In a reassuring sign that U.S. hospitals can contain the 
virus, Emory University Hospital in Atlanta said late Monday an 
American who was flown in from West Africa and treated for Ebola 
there since Sept. 9 has been released after being found free of 
the virus.  ID:nL2N0SF27L   
    The worst Ebola outbreak on record has killed more than 
4,500 people, most of them in Liberia, Guinea and Sierra Leone.  
    As more people with possible exposure end their quarantines 
anxiety over Ebola will "fade into the background in a hurry," 
said Simons of Rosewood Trading. 
    "The public has a short memory." 
 
 (Additional reporting by Rodrigo Campos; Editing by Lisa 
Shumaker) 
 ((Yasmeen.Abutaleb@thomsonreuters.com;)) 
 
Keywords: HEALTH EBOLA/MARKETS