UPDATE: Stocks close at lowest level in over a week as spread of China virus worries investors
By Andrea Riquier and Clive McKeef
Travel bans to counter virus may slow Chinese economic growth
Stocks slid to their lowest close in over a week Friday on concern the spread of China's coronavirus may disrupt travel and trade and slow global economic growth.
Some strong quarterly earnings reports, however, especially from Intel Corp. and American Express, helped to provide investors with some confidence.
How are benchmarks performing?
The Dow Jones Industrial Average closed down 170.36 points, or 0.6%, at 28,989.73, while the S&P 500 lost 30.07 points, or 0.9%, to finish at 3,295.47. The Nasdaq touched a fresh intraday high in early trade but then slid to end down 87.57 points, or 0.9%, at 9,314.91.
For the week the Dow lost 1.2%, while the S&P 500 gave back 1% and the Nasdaq fell 0.8%.
What's driving the market?
The spread of the respiratory virus in China and to other countries rattled global markets, fueling fears that the disruption to travel and trade may undermine global economic growth. Stocks and crude oil fell while demand for safe haven assets sent bond yields lower and gold prices up.
Read:Why the coronavirus outbreak gives stock-market investors another reason for caution (http://www.marketwatch.com/story/why-the-coronavirus-outbreak-gives-stock-market-investors-another-reason-to-be-cautious-2020-01-24)
China confirmed 830 cases of infection (https://www.wsj.com/articles/spreading-chinese-coronavirus-death-toll-rises-as-more-cities-are-locked-down-11579860808?mod=hp_lead_pos5) on Friday, with the official death count at 26, according to Chinese commission and state media. The U.S. Centers for Disease Control and Prevention said it had confirmed a second case of the virus in America (http://www.marketwatch.com/story/cdc-confirms-second-coronavirus-case-in-us-a-chicago-resident-who-returned-from-wuhan-on-jan-13-2020-01-24) (http://www.marketwatch.com/story/cdc-confirms-second-coronavirus-case-in-us-a-chicago-resident-who-returned-from-wuhan-on-jan-13-2020-01-24).
"State media has the death toll at 26 and concerns are growing that the travel bans in place will start to have a major impact on the economy with some calling for a 1 percentage point hit or greater with Chinese GDP," wrote Edward Moya, senior market analyst at brokerage Oanda, in a daily research note.
See:Why the coronavirus outbreak gives stock-market investors another reason to be cautious (http://www.marketwatch.com/story/why-the-coronavirus-outbreak-gives-stock-market-investors-another-reason-to-be-cautious-2020-01-24)
However, Wall Street sentiment was underpinned to some extent by corporate earnings reports. Of the 74 of the companies that have reported in the S&P 500 index thus far, 67.6% have reported above analysts' consensus expectations, while 23% have reported below, compared with an average of 65% of companies outperforming and 20% missing since 1994, according to I/B/E/S data from Refinitiv.
Meanwhile, U.S. purchasing manager activity (http://www.marketwatch.com/story/us-manufacturing-pmi-at-3-month-low-in-january-2020-01-24)was better than expected The IHS Markit composite PMI was 53.1 in January, a 10-month high.
Stocks have been on a record-setting tear since last year though, with the S&P 500 rising more than 28% in 2019 and gaining 2% so far in 2020.
"Profitability appears to be improving modestly, helped by a gentle recovery in the more depressed industrial sectors and continued steady growth elsewhere," Paul Quinsee, global head of equities at JP Morgan Asset Management, wrote in a note. "We see solid but unspectacular profits growth this year, with little letup in the pace of growth from the technology-driven secular winners."
See: These 5 charts show the debate over whether the stock market set up for another dot-com crash (http://www.marketwatch.com/story/is-the-us-stock-market-is-set-up-for-another-dot-com-crash-5-charts-2020-01-24)
Which stocks are in focus?
United Airlines (UAL) slide 3.5% and American Airlines (AAL) lost 4% on concern the spread of the virus will limit demand for air travel and tourism.
Citigroup , JP Morgan (JPM), and Bank of America (BAC) all lost ground on fears of a decline in credit-card spending and a decline in cross-border payments.
Boeing (BA) shares recovered from an early loss to end 1.7 % higher after a report the aircraft maker may make further cuts to its 787 Dreamliner production (http://www.marketwatch.com/story/boeing-to-consider-more-cuts-to-787-dreamliner-production-report-2020-01-24).
Dow component Intel Corp.(INTC) soared 8.1% after the chip maker reported fourth-quarter earnings that beat expectations following an upswing in personal-computer shipments (http://www.marketwatch.com/story/intel-stock-rallies-as-data-center-sales-drive-big-wall-street-beat-2020-01-23) and robust demand for chips to power data centers.
American Express Co.(AXP) gained 2.9%, (http://www.marketwatch.com/story/american-expresss-stocks-rises-toward-a-record-after-profit-beat-expectations-2020-01-24)after the credit-card and travel-services company reported a fourth-quarter profit that beat expectations (http://www.marketwatch.com/story/american-expresss-stocks-rises-toward-a-record-after-profit-beat-expectations-2020-01-24).
Inovio Pharmaceuticals Inc.(INO)shares jumped 10.4% after the company received a grant to develop a vaccine for the coronavirus.
How are other markets trading?
The yield on the 10-year U.S. Treasury note slipped 5.9 basis points to 1.68% its lowest since Oct. 10, contributing a 15 basis point decline this week.
The value of the U.S. dollar rose 0.2% against a basket of its peers, according to the ICE U.S. Dollar Index .
Crude-oil prices fell, with the cost of a barrel of West Texas Intermediate crude for March down $1.40, or 2.5% to $54.19 a barrel on the New York Mercantile Exchange. For the week, the U.S. benchmark fell 7.5%, the largest such fall for a most active contract since May, according to FactSet.
Gold for February delivery jumped $5.90 or 0.4% to about $1,571.30.
In Europe, the STOXX Europe ended up 0.9% at 423.64.
In Asia overnight, the China CSI, Japan's Nikkei 225 added 0.1% and Hong Kong's Hang Seng Index rose 0.2%.
-Andrea Riquier; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 24, 2020 16:33 ET (21:33 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.