U.S stocks recovered some ground Tuesday, after worries about the impact of China’s coronavirus outbreak on global economic growth sparked the biggest one-day selloff since early October on Monday.
Investors were also wading through a tide of quarterly results from a number of high-profile companies as earnings reporting season picks up steam.
What did the major indexes do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -4.42% gained 187.05 points, or 0.7%, to end at 28,722.85 while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -4.42% rose 32.61 points, or 1%, to close at 3,276.24. The Nasdaq Composite index /zigman2/quotes/210598365/realtime COMP -4.61% rose 130.37 points, or 1.4%, finishing at 9,269.68.
The Dow dropped 453.93 points Monday, a decline of 1.6%, to end at 28,535.80, while the S&P 500 shed 51.84 points, or 1.6%, to end at 3,243.63. It was the biggest decline for both indexes since Oct. 2. The Nasdaq Composite ended at 9,139.31, down 175.60 points or 1.9% — its biggest-one day fall since Aug. 23.
What drove the market?
Chinese authorities on Tuesday said deaths from the coronavirus epidemic rose to at least 106, while the number of confirmed cases in China rose to more than 4,500.
China’s already weakening economy is set to take another hit — with businesses across the country remaining shut for an extended public holiday and tourism grinding to a halt — as authorities struggle to contain the pneumonia-like coronavirus that has spread across the nation, the South China Morning Post reported.
“While the coronavirus outbreak is an unexpected risk factor that could move the markets if the situation deteriorates, and comparisons to the 2003 outbreak of severe acute respiratory syndrome (SARS) have been widespread, there are important differences,” J.P. Morgan, chief of global research, Joyce Chang wrote in a note.
“First, the Chinese government has taken serious actions much faster this time. Second, the mortality rate of the current coronavirus outbreak is 2-3% compared to +10% for SARS, and the vast majority of current casualties have been concentrated in elderly people with pre-existing conditions,” Chang said.
Investors are also digesting U.S. corporate earnings reports Tuesday. Apple is among the S&P 500 index components set to report after Tuesday’s close. Apple suppliers cautioned coronavirus could impact the phone maker’s planned production hike.
“Companies are beating earnings estimates by 5% thus far, a number in line with the post-crisis median but the best beat rate since 1Q19,” Morgan Stanley equity strategist Michael Wilson wrote.
But “there is a major gap between earnings revisions and year on year performance suggesting continued positive earnings momentum is needed to help support price momentum,” he said.