Concerns are growing on Wall Street that the coronavirus could cause serious economic damage beyond China, with analysts warning that the deadly outbreak is unlikely to recede anytime soon.

“Consensus is that this coronavirus outbreak (COVID-19) is going to get worse before it gets better,” Raymond James analysts said Tuesday in note to investors. “It seems as though the market is under-appreciating the potential dangers and what the key government leaders on the virus are saying.”  

Amplifying those concerns: This week’s guidance from Apple — a bellwether both for the high-tech industry and the broader U.S. economy — that the iPhone maker would miss its quarterly sales target because of the virus’s impact on the company’s sales and production in China. Apple shares fell nearly 2% on Tuesday.

The swiftly changing sentiment has investors reconsidering outcomes should the coronavirus prove more pervasive than feared.

The Raymond James analysts, citing interviews with public health experts and other sources, said they believe the number of cases in China to be 400,000 or more, dramatically higher than the official count of at least 73,000 confirmed infections and at least 1,874 deaths, all but five of them in mainland China.

The odds of a notable outbreak in the U.S. have increased to one in five from one in seven, according to the investment firm. And, given it took between seven weeks and 10 weeks for the virus to reach epidemic levels in China, it’ll likely be another two weeks to four weeks before it’s known if there will be any widespread outbreak in the U.S., the analysts noted. 

Americans exposed to coronavirus back in the U.S.

“One growing area of concern is that there was an assumption that this would be like SARS and by summer it would go away. Now there is a growing belief that this could become an annual seasonal virus (like colds and flu) or a global pandemic which means it would spread across the globe until ‘herd immunity’ is reached,” they wrote.

“Significant shock” to global system?

Other Wall Street analysts are sounding alarms, too. The outbreak represents a “significant shock” that’s likely to have material ramifications for the global economy, according to BNP Paribus economists Xd Chen, Luigi Speranza and Paul Hollingsworth.

“Not only does it reduce global demand, with China accounting for close to one fifth of global GDP, but there will be spillovers through supply chains and there could behavioral change in other countries too, affecting tourism and spending,” they noted. 

BNP now estimates global GDP growth at 2.6% in 2020, a 0.4 percentage point hit due to the outbreak.

The virus outbreak will be “significant enough” for global GDP to contract in the first quarter, according to Capital Economics’ senior economist Jonas Goltermann. 

The damage will eventually be undone so long as the virus is contained, yet “the global recovery will remain weaker than investors appear to anticipate,” Goltermann noted. “That suggests earnings growth will probably disappoint expectations and that equities are likely to make only limited gains over the rest of the year.”

On Tuesday, at least, U.S. stocks were falling from recent record highs as corporations and analysts fretted.  

Coronavirus quarantines sparks global fears over international impacts

The virus could lower first-quarter earnings a few cents a share, according to the CFO of Walmart, the country’s largest retailer, which reported closing less than a handful of stores in China. 

Medical device maker Medtronic, meantime, said it expects its fourth-quarter results will be impacted by the outbreak due to manufacturing disruptions and fewer procedures being done. 

European stocks were also hit as Apple suppliers Dialog Semiconductor and AMS weighed in with bleaker outlooks.

Flying “parts in suitcases from China”

HSBC also fell hard Tuesday after the long-troubled London-based bank said it would cut 35,000 jobs over the next three years as part of a broader shift away its weakest markets where it has seen billions in profits disappear in recent years. 

Still, in the short term, HSBC could incur as much as $600 million in loan losses should the virus persist. “There will be revenue impacts which will become progressively more acute if the coronavirus was to continue beyond the next month to six weeks,” HSBC CFO Ewan Stevenson told analysts on a conference call.

The U.K.’s biggest car maker reported having only two weeks of Chinese-made parts left for its factories in Britain. “We have flown parts in suitcases from China to the U.K. just to make sure that we have got the right parts,” Ralf Speth, Jaguar Land Rover’s CEO, said, according to media accounts.

But some analysts took current events — and specifically Apple’s warning — in stride. 

Mark Haefele, chief investment officer at UBS Global Wealth Management, called Apple’s warning “in line with our expectations for supply constraints to ease by midway through the second quarter of this year, setting up a strong rebound in the second half.”