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Jan. 24, 2020, 4:33 p.m. EST

Stocks slide to lowest level in over a week as spread of China virus worries investors

Travel bans to counter virus may slow Chinese economic growth

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By Andrea Riquier and Clive McKeef


Getty Images
AmEx shares in focus

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 /zigman2/quotes/210598065/realtime DJIA -3.56% closed down 170.36 points, or 0.6%, at 28,989.73, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -3.35% lost 30.07 points, or 0.9%, to finish at 3,295.47. The Nasdaq /zigman2/quotes/210598365/realtime COMP -3.71% 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

China confirmed 830 cases of infection 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.

“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

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 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.”

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,960.80
-1,032 -3.56%
Volume: 452.58M
Feb. 24, 2020 4:20p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,225.89
-111.86 -3.35%
Volume: 2.72B
Feb. 24, 2020 4:20p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
9,221.28
-355.31 -3.71%
Volume: 2.75M
Feb. 24, 2020 4:54p
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