Milan is trying to stay open despite the coronavirus.

The spreading coronavirus outbreak — the threat of the disease itself and the fallout from the reaction to it — has forced a global struggle between the head and heart. Politicians in Europe and the U.S. are urging calm preparedness, while stock market investors are running for the hills. 

Right now, raw emotion seems to be winning. 

The Dow Jones Industrial Average fell for the sixth straight trading session Thursday, dropping 1,190.95 points, or 4.4 percent, to 25,766.64, putting it at a loss of 12.2 percent since Feb. 19. 

Fashion is vulnerable on several fronts, relying on China, the coronavirus ground zero, as both a key supplier and consumer. The industry also needs an environment where shoppers feel comfortable hitting stores and spending.

Among the decliners caught in the stock vortex were Lululemon Athletica Inc., down 7.5 percent to $220.70; RealReal Inc., 7.3 percent to $13.86; Revolve Group, 6.7 percent to $15.58; TJX Cos. Inc., 6.1 percent to $60.12; Procter & Gamble Co., 5.5 percent to $113.50; Macy’s Inc., 5.1 percent to $12.90, and J.C. Penney Co. Inc., 5 percent to 69 cents.

But the falloff isn’t confined only to the U.S., which so far has escaped any serious escalation in coronavirus cases even as health officials have warned that it is not  “if” the virus will hit, but “when.”

In Europe, luxury stocks have seen sharp drops, although on Thursday the declines were somewhat more moderate, with Burberry Group down 4.1 percent to 16.81 pounds; LVMH Moët Hennessy Louis Vuitton, off 4 percent to 369.85 euros, and Salvatore Ferragamo down 3.8 percent to 14.33 euros. Still, these drops contributed to a steep decline since the recent market high on Feb. 19, with LVMH down a total of 11.7 percent, Burberry off 16.7 percent and Ferragamo down 14.3 percent. 

Pinpointing the right balance between rational reaction and justified caution is difficult — especially when the sky could seem to be falling. 

Health professionals say the coronavirus is more contagious and more deadly than the seasonal flu, but also that most cases are mild (although the exact nature of the illness is still being determined).  They have also warned schools and businesses in the U.S. to prepare for massive disruptions, noting the coronavirus will inevitably spread much farther. 

Businesses are caught somewhere between a rock and a hard place, dictating new policies for their global workforces, planning supply chain workarounds and nervously contemplating the future, which will be bleak for retailers if consumers decide they don’t want to be in stores. 

The economic toll could be severe. 

Goldman Sachs, expecting the virus to become widespread in the U.S., cut its outlook for earnings growth among S&P 500 companies to zero. The 500 leading U.S. firms are now expected to post earnings per share of $165 this year — a flat performance versus 2019 and down from prior expectations of earnings of $174. 

“Our reduced forecasts reflect the severe decline in Chinese economic activity in [the first quarter], lower end-demand for U.S. exporters, supply chain disruption, a slowdown in U.S. economic activity and elevated uncertainty,” Goldman said.

But politicians — who don’t tend to get re-elected for uncertainty or flat profits — want to keep their countries open for business. 

“The risk to the American people remains very low,” President Donald Trump said Wednesday in appointing Vice President Mike Pence as a kind of coronavirus czar. “We’re ready to adapt and we’re ready to do whatever we have to as the disease spreads, if it spreads.”

The message felt the same on the other side of the Atlantic. 

“Let’s tone it down,” said Giuseppe Conte, prime minister of Italy, which was hit with a sudden outbreak that disrupted Milan Fashion Week over the weekend. “Italy can’t be paralyzed.”

Milan’s Gothic cathedral, the Duomo, will reopen on Monday, and the closure of bars after 6 p.m. until 6 a.m. has been amended, as long as customers can sit at tables. After the closure of schools, museums, cinemas and theaters over the weekend, the government will decide whether schools will reopen on Monday, although the Marche region has already given a green light to students returning to school on March 2.

“Our country is stronger than the virus,” said the Minister of Health Roberto Speranza, whose last name aptly translates into “hope.” “Confident in the scientific community and the necessary measures, we will overcome this emergency all together.”

And Foreign Minister Luigi Di Maio said: “Our scientific community is addressing the situation brilliantly. We have gone from an epidemic risk to an ‘infodemic’ and our relationship with the foreign press at the moment is precious.”

His remarks came after the three patients, including the Chinese couple that had been touring Italy in January, treated for the coronavirus at Rome’s Spallanzani hospital had been cured.

Di Maio said the outbreak — which as of Thursday totaled 650 people in Italy — was still small and that comprehensive data was available because of the 1,000 swabs taken. “The people in quarantine are 0.089 percent of the population, and 0.01 percent of Italy’s territory is in isolation.”

Still, key fashion events are rapidly falling off the calendar as companies become even more cautious and many U.S. firms now require employees returning from Italy to work from home for two weeks. 

Organizers of Baselworld said Thursday they currently have no plans to cancel their Swiss watch fair but are monitoring the coronavirus situation with local, national and international authorities. This came after the cancellation Thursday of the rival Watches & Wonders event in Geneva, which is dominated by labels belonging to Compagnie Financière Richemont, including Cartier and Vacheron Constantin. That event had been scheduled just before Baselworld, in a coordinated move to feed into each other’s traffic flows. The cancellation of Watches & Wonders throws another challenge at Baselworld, which was already struggling to stem an exodus of brands from the show. Bulgari pulled out earlier this month, citing the coronavirus outbreak.

In addition, Movado pulled the plug on its Swiss watch conference, planned to be held in Davos from March 14 to 18.

“When the virus was largely contained within China, we felt we could keep the Davos summit but scale it back to become a conference for our European and Middle-Eastern customers,” said Efraim Grinberg, Movado’s chairman and chief executive officer. “Now with cases growing in Europe, we feel that we must act to protect the health and safety of our customers and employees.” 

The outbreak in Europe — and increased worries of a case in California with no obvious connection to the outbreak in Asia — highlighted how the coronavirus might have started in China, but is now much broader in its impactIn a turn, the situation seems to be coming into hand in China, which is now growing wary of travelers from other countries who might repatriate the virus. 

Beijing plans to quarantine people for 14 days at home or in groups if they have been to countries seriously hit by the coronavirus, and a number of cities across eastern and northeastern China are taking similar steps.

The coronavirus outbreak has killed more than 2,800 people and infected 82,000-plus people worldwide. The vast majority of them are in China, but this week the World Health Organization said that for the first time the virus was spreading faster outside China.

Cluster outbreaks have been seen in South Korea, which added 505 new cases, jumping to 1,766 on Thursday, marking the sharpest daily spike yet for the nation, and Italy, the worst-affected country in Europe, surged to 400 cases from 80 on Tuesday.

All together, there have been 82,592 confirmed cases of the coronavirus, according to a tally by Johns Hopkins University. Ninety-five percent of those have been in Mainland China. South Korea ranks as the country with the second-highest exposure, with 1,766 cases. The virus has also found its way to Africa, Australia, the Middle East and North and South America.

South Korea went on the highest possible alert earlier this week with the country’s president Moon Jae-in empowering the government to lock down cities and take other sweeping measures to contain the outbreak, although no specific measures were announced. Italy has put a number of cities in Lombardy and Veneto on lockdown.

“With more cases reported in [South] Korea and Italy, the next risk is [not only] that China’s production delays will affect the rest of the world but actually Korean production disruptions and also some European production disruptions may occur,” said Wang Tao, chief China economist at UBS. “New risks are emerging affecting the global supply chain. I think the markets in the last two, three days are reacting to that.

“When it was China, people tend to think maybe it’s a little far from us,” Wang said. “People [were] not observing the disruption from China yet because usually the first two weeks after Chinese New Year there’s not much action happening anyway so people hadn’t noticed the disruption. But now they are awakening to the fact that there will be delays from China but also new areas.”

A Fung Business Intelligence report similarly highlighted the global implications of the virus, pointing out that other nations may be less equipped to deal with an outbreak.

“For a number of reasons, be it political or economic, these countries might not be able or willing to take containment measures as stringent as China, which could doom their efforts to contain the Covid,” the report said. “Thus, we have to prepare for the possibility that the Covid could spread to even more countries and ultimately become a global pandemic.”

“The Covid-19 is no longer a China issue or an Asian issue, but a global issue,” it added.

And one that will have to be addressed with both the head and the heart.

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