Updated May 1.

Just when investors thought they had seen it all, a potential global pandemic is rocking markets across the world. Forget unprecedented government bailout plans for the financial sector, Chrysler's bankruptcy, terrorist attacks overseas and dismal corporate earnings. Now comes word this week that a swine flu epidemic, which likely started in Mexico earlier this month, has spread across the globe. The scare is causing volatility throughout the world's stock markets.

Health epidemics can seem straight out of Hollywood -- until they show up in your town. It's hard for most people to imagine that their lives can be put in jeopardy by something that happened on the other side of the world simply because one person got on a plane without knowing he was sick. That was surely the case with the SARS and bird flu epidemics earlier this decade that started in Asia and China and quickly threatened the U.S., only to seemingly disappear as soon as they showed up.

This time around ground zero is closer to home -- and the potential impact much more severe. Mexico officials are centering on a small town located near a pork processing plant where the possible first patient lived. Reports now say 159 people in Mexico who have died recently are being investigated for a connection with the virus. In the U.S. the Centers for Disease Control reportedly said Friday 141 cases in 19 states were confirmed, up from 109 cases in 11 states on Thursday. In Los Angeles County health officials were investigating two deaths in California possibly linked to the virus. There is no way to tell yet how accurate those numbers are. The World Health Organization raised its alert to its second-highest level, one short of indicating a global pandemic. Earlier it warned "this is a public health emergency of international concern" and said sustained human-to-human transmission was happening.

10 stocks to watch as this crisis unfolds.

Besides sharing a common border, Mexico is a big trading partner with the U.S. and a gateway to South America. Its resorts are also a hot spot for tourists. As governments warn on international travel to the area, the situation is impacting hotel chains, cruise ship companies and airliners. "The escalation of the swine flu could lead to more drastic developments that could hurt the already soft global economy," said Hamed Khorsand, an analyst at BWS Financial.

Here is a look at the stocks that could be impacted by the epidemic -- and a few that could come out of it on the winning side.

Photographs by Getty

Roche (RHHBY)
GlaxoSmithKline (GSK)

Swiss company Roche was having a rocky year after it announced a $47 billion bid for biotech firm Genentech () . However, its shares got a boost since it manufactures the influenza drug Tamiflu, which is used to treat the virus. A similar situation happened Monday at Glaxo, which makes Relenza, a drug also shown to combat the virus. Now, if both companies can ramp up production -- and the situation escalates -- they could see sales increase as governments stockpile antiviral drugs. (Novartis is reportedly in talks with the WHO to devise a vaccine.)

However, the rallies in both stocks were brief. Indeed, by Tuesday investors were taking profits. The trading appeared to be overdone, says Nomura analyst Amit Roy, pointing out that investors are betting on very large sales of antiviral drugs very soon -- a situation that may or may not come to pass. "The movement is premature at this point," Roy says. "It's suggesting the best-case scenario for Roche and more than the best-case scenario for Glaxo in terms of how much they could sell to replenish the world supply. That is unless they replenish the entire world supply in one go this year, which I think is unlikely."

Tyson Foods (TSN)
Smithfield Foods (SFD)

Although there's no evidence that swine flu can be spread through the consumption of pork, that didn't inoculate shares of pork producers from a selloff Monday. Analysts at JPMorgan Chase cut their earnings estimates Monday on Tyson Food and Smithfield Foods, noting that fear of a disease named after hogs can't be good for pork sales. Shares in both companies fell sharply. Since then Tyson has come back a bit, while Smithfield shares are still lagging. One catalyst: Mexico's Agriculture Department cleared pigs in a hog farm run near Veracruz that is 50% owned by Smithfield.

Carnival (CCL)
MGM Mirage (MGM)
Marriott (MAR)

Anything that keeps folks from traveling or congregating indoors with lots of strangers is bad for tourism and hotels. Carnival Cruise Lines, for example, has already had plenty of rough sailing in the global recession, particularly as the dollar has gained in strength and demand has dropped. The possibility of contracting a fatal disease doesn t help. On Tuesday, the company announced it canceled Mexico stops for three of its ships.

Klaus Hatlebrekke, an analyst at DNB Nor Markets in Oslo, says that cruise lines like Carnival have dealt with onboard disease outbreaks before, and while procedures for containment and quarantine exist, they don't always work for the stock price. "[The outbreak] could have a major impact if people become afraid of going on cruises," he said, "But historically what we have seen is a more temporary effect on demand."

Gambling stocks such as MGM Mirage, Las Vegas Sands (LVS) and Boyd Gaming (BYD) and hotel chains like Marriott suffered selloffs in the immediate wake of the swine flu news. MGM alone fell nearly 10% Monday but has since gained back that ground. Boyd came back, too. Meanwhile, Marriott was already suffering from the global economic downturn. The prospect of having even more empty rooms -- or just deeply discounted ones -- sent shares down 7% in two days. Bargain hunters, though, stepped in and set up a buying surge by week s end.

US Airways (LCC)

Airlines will likely be hurt during the short term, but flu isn't the biggest threat they face, says Jamie Baker, an analyst at J.P. Morgan. The question isn't who has the biggest Pacific or Latin American franchise that would be impacted by a widening outbreak of the disease. "The question is who is in the weakest liquidity shape who can least withstand the strain," he says

Based on the experience of SARS in 2003 and its impact on flying, coupled with the ongoing crunch, "the results really do differ by airline," Baker says. "Alaska Airlines (ALK), Delta (DAL) and Continental (CAL) can actually withstand this sort of hit, but US Airways and United cannot."

iShares MSCI Mexico (EWW)

Mexican equities took a beating on the swine flu headlines. ETF investors with exposure to the emerging market at the likely center of the outbreak saw the iShares MSCI Mexico Investable Market Index fall sharply Monday, hurt partly by steep selloffs in shares of Wal-Mart de Mexico (WMMVY) and Kimberly-Clark de Mexico (KCDMY) . Shares in Mexican telecom America Movil (AMX), a top iShares MSCI Mexico holding, also declined. More broadly, the Mexican stock market benchmark IPC index fell as much as 5% in early Monday trading. The selling subsided Friday but market fears still abound.

Walt Disney (DIS)

Fears of the flu are unlikely to help the already recession-hit U.S. tourism industry. Unconfirmed reports of swine flu cases among two visitors to Walt Disney World in Orlando caused a scramble by health officials at a Florida hospital. "We have not had any confirmations from the CDC," hospital president Dr. Scott Brady said. "We've had two or three cases of positive influenza. We should know about these in 48 hours."

The European Union s health commissioner on Monday told Europeans to avoid traveling to the U.S. or Mexico if possible. Officials have also suggested avoiding areas where large groups of people congregate. That could make things tougher on media giant and Dow component Walt Disney earlier this week, which is already slashing prices at its world famous theme parks in order to prop up attendance. But reports later showed crowds were still coming to its Orlando theme park; the stock price increased in turn. "It's too early to say what the impact will be," says Pali Capital analyst Richard Greenfield. "Let's wait and see how this swine flu scare evolves."

Market Vectors Gold Miners (GDX)
SPDR Gold (GLD)

Any investor who has watched the exchange-traded fund market the last year knows that when news is bad, traders head for this safe haven. Gold is typically seen as a place to stow money when inflation rears its ugly head. The last year it has also become a place to hide from unpredictable events. Expect the Market Vectors Gold Miners and the SPDR Gold ETFs to move as long as the epidemic is still in the headlines.