U.S. stocks tumbled to close lower for a sixth straight day Thursday, taking benchmark indexes into correction territory and to the lowest levels since October, as the global coronavirus epidemic disrupted international trade and travel.
How did major indexes fare?
The Dow Jones Industrial Average (DOW:DJIA) lost 1,190.90 points, or 4.4%, to close below 26,000 at 25,766.60, while the S&P 500 (S&P:SPX) shed 137.63 points, or 4.4%, to end at 2,978.76. The Nasdaq Composite (AMERICAN:COMP) slumped 414.29 points, or 4.6%, finishing at 8,566.48.
All three benchmarks closed in correction territory, defined as a decline of at least 10%, but no more than 20%, from a recent peak. For the S&P 500 and Nasdaq, it marked the worst daily percentage drop since Aug. 18, 2011, but the steepest since Feb. 5, 2018 for the Dow.
The Dow is now down 9.71% for the year, while the S&P 500 is off 7.80% year-to-date, and the Nasdaq has lost 4.53%.
What drove the market?
Investor sentiment took another hit Thursday when California’s governor said 8,400 people were being monitored after travelling to China. The outbreak has the potential to become a pandemic and is at a decisive stage, the head of the World Health Organization said Thursday.
The latest slide began Wednesday night, after a news conference by President Donald Trump failed to reassure investors and more new cases of the disease were reported outside China than inside for the first time.
“The number of confirmed cases of coronavirus is on the rise, and so is the number of countries that have infections. Dealers are dreading a pandemic as they are afraid economic activity will be reduced as lockdowns will disrupt the business world,” said David Madden, market analyst at CMC Markets UK, in a note.
The global economy is on course for its weakest year since the 2008 financial crisis as efforts to contain epidemic has hit manufacturing activity in China and disrupted international trade and travel, Bank of America predicted. Earlier, Goldman Sachs cut its outlook for U.S. companies’ profit growth to zero.
“And frankly at this stage after the coronavirus slow down in travel plans that has busted the global supply chain apart, it will be a miracle if we avoid a recession,” MUFG chief economist, Chris Rupkey said. “If companies can’t get the parts, then they can’t produce the goods that make the economy hum.”
In U.S. economic data reported Thursday, the number of Americans applying for unemployment benefits for the first time rose more than expected in the Feb. 22 week. Jobless claims are still close to longtime lows, however.
And an updated estimate of U.S. fourth-quarter gross domestic product matched economist expectations and showed no change from the first estimate of 2.1% annualized growth. A report on U.S. durable goods orders was weaker than expected, declining 0.2% in January.
Which companies were in focus?
Shares of Best Buy Co. Inc. (NYS:BBY) fell 4.5% despite reporting fourth-quarter profit and revenue that topped Wall Street expectations.
Perrigo Co. PLC (NYS:PRGO) shares tumbled 14.3% after the provider of over-the-counter health and wellness products reported fourth-quarter adjusted profit that was shy of expectations, sales that were in line, and a downbeat full-year earnings forecast.
Teladoc Health Inc. (NYS:TDOC) shares roared 15.7% higher after a pair of hefty price target increases.
Shares of J.C. Penney Co. Inc. jumped in premarket trading Thursday but closed 5% lower after the retailer reported earnings and revenue that topped analyst expectations and offered guidance that wasn’t as bearish as Wall Street forecasts.
Booking Holdings Inc., the company formerly known as Priceline, lost 1.1% after the company said late Wednesday that coronavirus would hit its Q1 profit. Wall Street analysts on Thursday cut their stock price target for the online travel aggregator.
Tesla Inc. (NAS:TSLA) shares fell 12.8% Thursday, a weekly loss for the car maker of about 25%.
Shares of Whiting Petroleum Corp . (NYS:WLL) lost 24.3% after the company provided guidance that disappointed analysts.
Apache Corporation (NYS:APA) shares ended 2.6% higher after the company reported higher-than-expected earnings.
Square Inc. (NYS:SQ) shares rose 3.6% after strong earnings.
How did other markets fare?
Most Asian markets fell Thursday, with Japan’s Nikkei (NIKKEI:JP:NIK) down 2.1%, while Hong Kong’s Hang Seng (HONG:HK:HSI) rose 0.3% and South Korea’s Kospi (KOREA:KR:180721) slipped 1.1%.
European markets slumped for a sixth day with the Stoxx Europe 600 (STOXX:XX:SXXP) closing down 3.8% at 389.45.
The U.S. dollar index (IFUS:DXY) slipped 0.5% against a basket of currency trading partners.
Gold for April delivery gave back earlier gains to finish lower for a third day at $1,642.50, while the 10-year U.S. Treasury (XTUP:BX:TMUBMUSD10Y) rate fell 1.4 basis points to 1.296%, recovering from another all-time low earlier in the morning.
Oil prices fell to a 13 month low with West Texas Intermediate crude for April delivery tumbling 3.4% to settle at $47.09 and Brent crude, the global benchmark, fell 2.3% to end at $52.18 a barrel.
The Cboe Volatility Index (845:VIX) surged 41%.