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Stocks Fall on Coronavirus Fears 01/24 16:12
Health care companies led a broad slide in U.S. stocks Friday as increased
fears over the spread of a deadly outbreak of coronavirus rattled markets.
(AP) -- Health care companies led a broad slide in U.S. stocks Friday as
increased fears over the spread of a deadly outbreak of coronavirus rattled
markets.
The S&P 500 had its worst day since early October and snapped a two-week
winning streak.
The sell-off followed news that a Chicago woman has become the second U.S.
patient diagnosed with the new virus from China. Health authorities worldwide
have been taking measures to try to contain and monitor the coronavirus
outbreak.
"It really is a reaction to the widening nature of what's going on with the
coronavirus," said Lisa Erickson, head of traditional investments at U.S. Bank
Wealth Management. "People are concerned about, ultimately, the impact on
Chinese growth and perhaps global growth."
The S&P 500 index fell 30.07 points, or 0.9%, to 3,295.47. The index had
been down as much as 1.3% earlier.
The Dow Jones Industrial Average dropped 170.36 points, or 0.6%, to
28,989.73. It briefly slid more than 316 points.
The Nasdaq composite lost 87.57 points, or 0.9%, to 9,314.91. The Russell
2000 index of smaller company stocks slumped 22.78 points, or 1.4%, to 1,662.23.
The stock market has been mostly racking up gains going back to last fall.
Before this week, the S&P 500 had only posted a weekly decline three times
since October. Even with this week's decline of 1%, the benchmark index is
still up 2% for the month.
Jitters over the potential economic fallout from the coronavirus outbreak
intensified Friday as the tally of confirmed cases continued to climb, rising
to more than 850. Twenty-six people have died, all in China. The Centers for
Disease Control said over 2,000 returning travelers had been screened at U.S.
airports and 63 patients in 22 states were being tested.
The virus can cause pneumonia and other severe respiratory symptoms. The
World Health Organization has so far held off on declaring the situation a
global emergency, which would bring more money and resources to fight it, but
also could trigger economically damaging restrictions on trade and travel.
Shares in airlines and several other companies in the travel and tourism
industries fell Friday. United Airlines slid 3.5% and American Airlines dropped
4%. Cruise line operator Carnival fell 3.9%.
Drugmaker Bristol-Myers Squibb was among the biggest decliners in the health
care sector, shedding 4%. Health insurers also fell. UnitedHealth Group dropped
2.2% and Amgen lost 4%.
Banks and other financial sector companies also took heavy losses, with
credit card issuers among the biggest losers.
The price of U.S. crude oil fell 2.5%, dragging down energy stocks. Hess
lost 3.2%.
Utilities notched a slight gain as investors shifted money into safe-play,
high-dividend stocks and U.S. government bonds. The surge in bond-buying sent
yields lower. The yield on the 10-year Treasury note fell to 1.69% from 1.74%
late Thursday, a big move.
Investors continued to dig through the latest batch of company earnings
reports Friday.
Intel surged 8.1% after the chipmaker blew past Wall Street's fourth-quarter
profit forecasts. The company cited demand for cloud-computing as the key
reason for the solid financial results. It also gave investors an upbeat
forecast for the first quarter, which helped inject some confidence into the
broader market for chips.
American Express rose 2.8% after the credit card issuer and global payments
company beat Wall Street's fourth-quarter profit forecasts.
Shares in two credit card issuers fell sharply after the companies released
mixed quarterly snapshots. Discover Financial Services slumped 11.1% after it
issued disappointing 2020 guidance. Synchrony Financial skidded 9.9% after its
fourth-quarter revenue fell short of analysts' forecasts.
Next week is shaping up as the busiest week for earnings reports, with
roughly 40% of the companies in the S&P 500 due to issue their results for the
last three months of 2019.
So far, about 16% of S&P 500 companies have reported their quarterly
results. Early indications have been encouraging, with 72.8% of those companies
topping analysts' forecasts for profits, according to S&P Global Market
Intelligence.
Even so, the outlook for 2020 earnings isn't improving as many investors
expected, said Sam Stovall, chief investment strategist at CFRA.
"The reason the market was up 13% in the past 3 months is with the
expectation that we would see a ramp-up in economic growth and earnings
increases, but that has yet to materialize," he said. "2020 (earnings)
estimates have actually come down. They were expected to be up 7.9%, now
they're expected to climb 7.6%."
Benchmark crude oil fell $1.40 to settle at $54.19 a barrel. Brent crude
oil, the international standard, dropped $1.35 to close at $60.69 a barrel.
Wholesale gasoline fell 4 cents to $1.52 per gallon. Heating oil declined 6
cents to $1.73 per gallon. Natural gas fell 4 cents to $1.89 per 1,000 cubic
feet.
Gold rose $6.50 to $1,571.10 per ounce, silver rose 29 cents to $18.06 per
ounce and copper fell 4 cents to $2.69 per pound.
The dollar fell to 109.24 Japanese yen from 109.52 yen on Thursday. The euro
weakened to $1.1029 from $1.1056.
European markets closed with solid gains, helped by a report that showed
improvement in manufacturing activity. Germany's DAX jumped 1.4% and the CAC 40
in France rose 0.9%. Markets were closed in Shanghai and the rest of mainland
China, South Korea, Malaysia and Taiwan. Japan's Nikkei and Hong Kong's Hang
Seng edged higher.
(CZ)
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