Stocks rise, but virus fears linger
Stocks rose in much of the world Monday and recovered some of their losses from earlier weeks, but markets are still far from giving the all-clear on the virus that has spread to more than 20 countries and infected more than 17,000 people.
Chinese stocks tumbled nearly 8% after investors there got a chance to catch up to losses that swept through other markets. Monday was the first day of trading in more than a week in Shanghai, and losses would probably have been bigger if not for moves by Chinese authorities, including the pumping of $173 billion into the financial system.
In the United States, a warning signal of recession in the bond market continued to flash red. The price of crude oil also kept sliding on worries that a global economy weakened by the virus will burn less fuel. Prices fell for copper and other building blocks of the economy.
The S&P 500 rose 23.40 points, or 0.7%, to 3,248.92 and clawed back some of its losses following its first back-to-back weekly drops of 1% since August. The Dow Jones industrial average gained 143.78, or 0.5%, to 28,399.81, and the Nasdaq composite climbed 122.47, or 1.3%, to 9,273.40. The indexes remain 1.4% to 3.2% below their records set last month.
The virus fears have struck just as investors believed economic growth would re-accelerate around the world, thanks in large part to interest rate cuts and bold actions by the Federal Reserve and other central banks around the world.
A report on Monday said U.S. manufacturing returned to growth in January for the first time in six months, but many investors discounted it because it doesn’t fully reflect all the virus concerns.
In a troubling sign, the bond yield curve is “inverting,” meaning that short-term Treasurys offer higher yields than longerterm Treasurys. Investors see that as a rather reliable predictor of recessions. But the tool doesn’t have a perfect track record.
On Monday, the threemonth yield was at 1.56%, above the 1.52% yield of the 10-year, which itself rose from 1.51% late Friday.
In the U.S. stock market, Nike jumped 3.1% to help drive the Dow higher as investors tried to handicap how much its earnings will be hurt by the virus. Like other companies that do lots of business with China, it had dropped sharply in earlier weeks. Nearly 18% of its revenue last quarter came from China.
Benchmark U.S. crude oil tumbled $1.45, or 2.8%, to settle at $50.11 per barrel. Brent crude, the international standard, fell $2.17, or 3.8%, to settle at $54.45 per barrel.
Gold fell $5.70 to $1,577.20 per ounce and silver fell 33 cents to $17.64 per ounce.
The dollar rose to 108.67 Japanese yen from 108.37 yen on Friday. The euro weakened to $1.1063 from $1.1089.