Market Snapshot: Dow futures slip as coronavirus death toll outside of China rises

U.S. stock futures edged lower early Thursday, retreating after the S&P 500 index and the Nasdaq booked all-time closing highs in the previous session.

Although markets have been heartened by daily reports of a slowing rate of the spread of COVID-19, the infectious disease that originated in Wuhan last year, deaths and cases of the disease outside of China may be sparking some anxiety.

How did benchmarks perform?

Futures for the Dow Jones Industrial Average

YMH20, -0.22%

were down 93 points, or 0.3%, at 29,244, those for the S&P 500 index

ESH20, -0.23%

were off 11.70 points, or 0.4%, at 3,375.50, while Nasdaq-100 futures

NQH20, -0.31%

declined 40.50 points to reach 9,693, 0.4% lower.

On Wednesday, the Dow

DJIA, -0.16%

advanced 115.84 points, or 0.4%, to 29,348.03. The S&P 500

SPX, -0.14%

rose 15.86 points, or 0.5%, to end at 3,386.15, marking a record finish. The Nasdaq Composite

COMP, -0.18%

added 84.44 points, or 0.9%, to end the session at a record at 9,817.18, its second all-time closing high in a row.

What drove the market?

Some attributed the lack of buying conviction early Thursday due to high valuations after the most recent round of records for the benchmark U.S. indexes and news of deaths globally from the spread of the coronavirus from China.

A report from South Korea’s Yonhap News Agency says COVID-19 has claimed its first life and the mayor of the South Korean city of Daegu urged its 2.5 million people to refrain from going outside, according to the Associated Press. Reports indicate that cases of COVID-19 in South Korea have more than doubled to 104 in a day and with 35 additional cases cropping up in Daegu on Thursday. Japan also reported that two elderly passengers from a quarantined ship that had been hospitalized due to infectious disease have died, according to the country’s health ministry.

China cut the benchmark lending rate on Thursday, as widely expected, in a move to lower financing costs for businesses. The corona virus epidemic has disrupted global supply chains and factory activity in China. The benchmark one-year loan prime rate was cut by 10 basis points, and the five-year loan prime rate by 5 basis points. The disease from coronavirus has infected nearly 75,000, and claimed more than 2,100 lives in China, according to the country’s National Health Commission.

Goldman Sachs’ chief global equity strategist Peter Oppenheimer said that the chances for a correction or pullback were rising due to the spread of the contagion out of Asia. “In the nearer term…we believe the greater risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the risks of a correction are high,” the strategist said.

Still, investors may be willing to continue pushing stocks to new heights on hope for easy-money policies from the Federal Reserve and central banks globally.

“We think today’s pre- market softness is technical and is not likely to derail another mixed to positive session,” said Peter Cardillo, chief market economist at Spartan Capital Securities in a Thursday research note.

A pair of early-morning reports showed resilience in the U.S. economy. The number of Americans filing for unemployment benefits ticked up marginally in the most recent week but still hovered near multi-year lows. A gauge of manufacturing activity in the mid-Atlantic area surged to a two-year high in February. The new orders component of the Philadelphia Fed’s survey was at its highest since May 2018.

Read: Here’s the segment of the economy that may benefit from fears of coronavirus, analysts say

Which stocks were in focus?

Morgan Stanley

MS, -4.03%

is set to buy E-TRADE Financial Corp.

ETFC, +24.10%

 in an all-stock deal valued at $13 billion, according to the Wall Street Journal. Shares of E-Trade surged 25%, while those for Morgan Stanley fell nearly 5% in premarket action. Shares of Charles Schwab Inc., a brokerage competitor, ticked down premarket.

Shares of L Brands Inc.

LB, -5.72%

 were down 7% premarket after reports that it was selling Victoria’s Secret to private equity.

Shares of Zillow Group Inc.

Z, +16.89%

  jumped premarket after a set of upgrades following a fourth-quarter earnings call late Wednesday.

Six Flags Entertainment Corp.

SIX, -19.03%

 shares were down more than 18% before the opening bell after the theme-park operator slashed its dividend.

How are other assets performing?

The price of a barrel of West Texas Intermediate crude for March delivery

CLH20, +1.44%

rose 0.8% to $53.74 a barrel on the New York Mercantile Exchange.

Gold for April delivery

GCJ20, +0.34%

was on pace for a sixth straight gain, rising 0.6% to trade at $1,620.70 an ounce, extending its climb above the psychologically important level at $1,600.

The U.S. dollar

DXY, +0.03%

was up 0.1% against a basket of rival currencies at 99.83.

The benchmark U.S. 10-year Treasury note

TMUBMUSD10Y, -1.58%

was down 2.8 basis points at 1.54%. Bond yields fall when prices rise.

In Europe, the Stoxx Europe 600

SXXP, -0.51%

traded 0.4% lower, while the FTSE 100

UKX, +0.05%

lost 1.1%.

Trade was mixed in Asia overnight. The China CSI 300

000300, +2.30%

 rose 2.3%, Hong Kong’s Hang Seng Index

HSI, -0.17%

fell 0.2%, while the Shanghai Composite

SHCOMP, +1.84%

advanced 1.8%. Japan’s Nikkei

NIK, +0.34%

advanced 0.3%, while South Korea’s Kospi

180721, -0.67%

sank 0.7%.

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