Coronavirus infects Wall Street investors with uncertainty

Wall Street fell in a broad selloff on Friday, with investors fleeing stocks amid growing concerns over the scope of the coronavirus outbreak, with the S&P 500 clocking in with its worst week in six months.

All three major United States stock indexes turned sharply negative, with the S&P 500 seeing its biggest one-day percentage drop in over three months after the US Centers for Disease Control and Prevention confirmed the second case of the virus on US soil, this time in Chicago.

The S&P 500 and the Dow Jones Industrial Average wrapped up their worst week since August, but the Nasdaq Composite snapped a six-week winning streak.

Market participants are keeping a wary eye on developments surrounding the coronavirus, which the World Health Organization (WHO) has deemed “an emergency in China”. The virus has now killed 26 people and infected more than 800 on the eve of the Lunar New Year holiday.

“Markets hate uncertainty and the virus has been enough to inject uncertainty in the markets,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

But some analysts believe the investors were looking for a reason to take money off the table.

“The virus is really more an excuse to take profits right now,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, agreed. “The markets are expensive and were looking for a reason to go down, and [the virus] is the excuse to do it.”

Intel Corp’s stock surged 8.1 percent after reporting jumps in data-centre and cloud-computing revenue and forecasting better-than-expected 2020 earnings.

Consumer credit company American Express Co benefitted from a robust US retail sales environment, posting a better-than-expected nine percent annual revenue increase. Its stock advanced 2.8 percent.

Fourth-quarter reporting season is well under way, with 74 companies in the S&P 500 having reported, 68.2 percent of which have beaten Wall Street estimates, according to Refinitiv data.

Analysts now expect earnings to have contracted by 0.5 percent, on aggregate, in the October to December quarter.

Next week, a swarm of closely watched results are expected, notably from Apple Inc, McDonald’s Corp, Starbucks Corp, Tesla Inc, Amazon.com Inc, Boeing Co, Facebook Inc and Caterpillar Inc, among others.

The Dow Jones Industrial Average fell 170.36 points, or 0.58 percent, to 28,989.73, the S&P 500 lost 30.09 points, or 0.90 percent, to 3,295.45 and the Nasdaq dropped 87.57 points, or 0.93 percent, to 9,314.91.

Of the 11 major sectors in the S&P 500, all but utilities ended the session in negative territory, with the healthcare and financial sectors suffering the largest percentage losses.

Broadcom Inc rose 1.3 percent after entering an agreement with Apple Inc for the supply of wireless components used in its products.

Rivals Skyworks Solutions and Qorvo Inc were down 4.6 percent and 4.5 percent, respectively, on the news.

Declining issues outnumbered advancing ones on the New York Stock Exchange by a 2.33-to-1 ratio; on Nasdaq, a 2.94-to-1 ratio favoured decliners.

The S&P 500 posted 85 new 52-week highs and five new lows; the Nasdaq recorded 115 new highs and 62 new lows.

Volume on US exchanges was 7.96 billion shares, compared with the 7.13 billion average over the last 20 trading days.