Market Snapshot: Stocks slip in afternoon trade, threaten to extend coronavirus selloff

U.S. stocks were trading mostly lower in afternoon trade Wednesday, giving back the morning’s gains, with investors concerned about the spread of the coronavirus epidemic in Europe and the U.S. where President Trump and federal health officials plan a public briefing Wednesday evening.

What are major indexes doing?

The Dow Jones Industrial Average

DJIA, -0.46%

fell 142 points, or 0.5%, to trade near 26,936, while S&P 500

SPX, -0.38%

 shed 12 points, or 0.4%, to trade at 3,116. The Nasdaq Composite

COMP, +0.17%

was up 3 points, or less than 0.1%, at 8,970, or flat for 2020. The Dow and S&P 500 are negative year-to-date.

On Tuesday, the Dow dropped 879.44 points, or 3.2%, to 27,081.36, while the S&P 500 shed 97.68 points, or 3%, to close at 3,128.21. The Nasdaq Composite dropped 225.67 points, or 2.8%, to finish at 8,965.61. Tuesday’s decline was the fourth straight for all three major indexes.

What’s driving the market

Equities fell as the rapid spread of COVID-19 infections and deaths outside of China continued to hang over markets.

“The last couple of days have seen like an emotional reaction, as opposed to a fact-based reaction,” Oliver Pursche, chief market strategist with Bruderman Asset Management, told MarketWatch. “The reality is that the data is coming in so quickly and changing so quickly,” he said about the spread of the illness beyond Asia. “It’s really difficult to see that changing over then next three or four weeks.”

The S&P 500 index this week suffered its first back-to-back decline of over 3% since the August 2015 when China was devaluing its currency.

While investors pointed to encouraging signs that central banks and policymakers may be more willing to deploy economic stimulus to cushion the blow from the virus, the number of confirmed cases and deaths outside China has continued to rise, particularly in Italy, Iran, Japan and South Korea. Stocks extended losses Tuesday after the Centers for Disease Control and Prevention said Americans should prepare for the spread of the coronavirus in the U.S.

See: What Apple, Coca-Cola, Nike and other U.S. companies are saying about the coronavirus outbreak

If COVID-19, the coronavirus that has sickened more than 80,000 people, spreads across the U.S. as health officials are warning, consumer-facing companies would be the first to be hit as their customers isolate themselves and avoid public spaces, experts said Wednesday.

“Investors have largely been caught off-guard by the serious and far-reaching economic consequence of the coronavirus,” said Nigel Green, founder and chief executive of the deVere Group, a financial services and advisory company. While some multinationals have lowered earnings guidance, “many more are likely to do so in coming weeks. Clearly, this will hit global supply chains, economies across the world and ultimately government coffers too,” said Green.

See: Businesses world-wide count coronavirus cost. And it’s looking bleak.

However, in economic data, U.S. new-home sales soared 7.9% in January to an annualized pace of 764,000, well above the consensus estimate of 722,000. Low mortgage rates have helped to lift homebuying activity.

COVID-19 case tally: 81,245 cases, 2,770 deaths

Which companies are in focus?
  • Dow component Walt Disney Co.

    DIS, -3.77%

     shares fell 1.7% after the entertainment giant late Tuesday announced that Chief Executive Robert Iger was stepping aside. Bob Chapek, who has served as chairman of Disney Parks, Experiences and Products, succeeded Iger, who is staying on as executive chairman, effective immediately.

  • Shares of fast-food chain Wendy’s Co.

    WEN, -4.66%

     were down 4% after the company matched profit expectations for the fourth quarter but delivered guidance that fell slightly short of estimates.

  • Lowe’s Cos.

    LOW, -4.40%

     shares fell after the home-improvement retailer provided guidance on next fiscal year’s earnings that fell short of consensus projections.

  • Salesforce.com Inc. shares

    CRM, -1.32%

      fell 1.7% after the cloud-based enterprise software provider reported fourth-quarter earnings that were shy of Wall Street estimates. The company also announced that co-CEO Keith Block was stepping down.

  • Tesla Inc.

    TSLA, -2.64%

     shares edged lower after analysts at Evercore ISI said the company could be forced to temporary shutdown Autopilot, the Silicon Valley car maker’s suite of advanced driver-assistance systems, following a government report on a fatal crash.

How are other markets trading?

Oil futures edged lower, with the price of a barrel of West Texas Intermediate crude for April delivery

CLJ20, -2.51%

  on the New York Mercantile Exchange giving up $1.30, or 2.6%, to trade at $48.59.

In precious metals, gold

GCJ20, -0.41%

 prices lost ground for a second day in a row, shedding $6.90, or 0.4%, to settle at $1,643.10 an ounce.

The benchmark U.S. 10-year Treasury note yield

TMUBMUSD10Y, -0.75%

  was 2.2 basis points lower at 1.306%, a day after the long-dated maturity hit a record intraday low of 1.31%. Bond yields fall as prices rise.

The U.S dollar index

DXY, +0.15%

  was trading flat against a basket of its currency rivals.

Asian markets added to their drop, with Japan’s Nikkei

NIK, -0.79%

  closing lower by 0.8%. China’s CSI

000300, -1.23%

 index, which tracks mainland-listed stocks, fell 1.2%.

European stocks came off their lows, with the Stoxx Europe 600 index trading flat. The FTSE MIB in Italy

I945, +1.44%,

which has the highest number of confirmed coronavirus cases in Europe, rose 1.4%.

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