AP – Health care companies led a broad slide in United States (US) stocks as increased fears over the spread of a deadly outbreak of coronavirus rattled markets.
The S&P 500 had its worst day since last October and snapped a two-week winning streak.
The sell-off followed news that a Chicago woman became the second US 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 head of traditional investments at US Bank Wealth Management Lisa Erickson. “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 per cent, to 3,295.47. The index had been down as much as 1.3 per cent earlier.
The Dow Jones Industrial Average dropped 170.36 points, or 0.6 per cent, to 28,989.73. It briefly slid more than 316 points.
The Nasdaq composite lost 87.57 points, or 0.9 per cent, to 9,314.91. The Russell 2000 index of smaller company stocks slumped 22.78 points, or 1.4 per cent, 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 one per cent, the benchmark index is still up two per cent 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 travellers had been screened at US airports and 63 patients in 22 states were being tested.
The virus can cause pneumonia and other severe respiratory symptoms. The World Health Organization (WHO) 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 on Friday. United Airlines slid 3.5 per cent and American Airlines dropped four per cent. Cruise line operator Carnival fell 3.9 per cent. Drugmaker Bristol-Myers Squibb was among the biggest decliners in the health care sector, shedding four per cent. Health insurers also fell. United Health Group dropped 2.2 per cent and Amgen lost 4fourper cent.
Banks and other financial sector companies also took heavy losses, with credit card issuers among the biggest losers.
The price of US crude oil fell 2.5 per cent, dragging down energy stocks. Hess lost 3.2 per cent.
Utilities notched a slight gain as investors shifted money into safe-play, high-dividend stocks and US government bonds. The surge in bond-buying sent yields lower. The yield on the 10-year Treasury note fell to 1.69 per cent from 1.74 per cent late Thursday, a big move.
Investors continued to dig through the latest batch of company earnings reports on Friday.
Intel surged 8.1 per cent 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 per cent 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 per cent after it issued disappointing 2020 guidance. Synchrony Financial skidded 9.9 per cent 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 per cent of the companies in the S&P 500 due to issue their results for the last three months of 2019.
So far, about 16 per cent of S&P 500 companies have reported their quarterly results. Early indications have been encouraging, with 72.8 per cent of those companies topping analysts’ forecasts for profits, according to S&P Global Market Intelligence.
Even so, the outlook for 2020 earnings is not improving as many investors expected, said Chief Investment Strategist at CFRA Sam Stovall.
“The reason the market was up 13 per cent in the past three months is with the expectation that we would see a ramp-up in economic growth and earnings increases, but that has yet to materialise,” he said. “2020 (earnings) estimates have actually come down. They were expected to be up 7.9 per cent, now they’re expected to climb 7.6 per cent.”
Benchmark crude oil fell USD1.40 to settle at USD54.19 a barrel. Brent crude oil, the international standard, dropped USD1.35 to close at USD60.69 a barrel.
Wholesale gasoline fell four cents to USD1.52 per gallon. Heating oil declined six cents to USD1.73 per gallon. Natural gas fell four cents to USD1.89 per 1,000 cubic feet.
Gold rose USD6.50 to USD1,571.10 per ounce, silver rose 29 cents to USD18.06 per ounce and copper fell four cents to USD2.69 per pound.
The dollar fell to JPY109.24 from JPY109.52 on Thursday. The euro weakened to USD1.1029 from USD1.1056.
European markets closed with solid gains, helped by a report that showed improvement in manufacturing activity. Germany’s DAX jumped 1.4 per cent and the CAC 40 in France rose 0.9 per cent. 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.