Stocks sink; Treasury prices soar

Stocks fell and bond prices rose amid signs that fallout from the viral outbreak is hurting U.S. companies.

Stocks fell and bond prices rose sharply on Wall Street Friday amid signs that economic fallout from the viral outbreak that originated in China is hurting U.S. companies.

The yield on the 30-year Treasury reached a record low as investors sought the safety of U.S. government bonds. The price of gold climbed 1.7%.

New data showing manufacturing and business activity suddenly slowed this month stoked investors’ anxiety over the outbreak’s impact on company profits. New reports that infections are spreading added to traders’ jitters.

“There’s a little bit more concern about how hard this is going to impact, not just Asia, but also the broad global economy,” said Adam Taback, chief investment officer for Wells Fargo Private Bank.

Technology stocks led the selling. Retailers, travel-related companies, banks and communication services stocks also took heavy losses. The sell-off capped a volatile, holiday shortened week that left the benchmark S&P 500 index with its first weekly loss after two weeks of gains.

The S&P 500 index fell 35.48 points, or 1.1%, to 3,337.75. The Dow Jones Industrial Average slid 227.57 points, or 0.8%, to 28,992.41. The Nasdaq lost 174.37 points, or 1.8%, to 9,576.59.

The Russell 2000 index of smaller company stocks gave up 17.46 points, or 1%, to 1,678.61.

Asian and European markets also fell.

Investors have been trying to gauge how damaging the virus outbreak will be to corporate earnings, and whether supply chain interruptions, softer sales and other problems stemming from travel restrictions, business and factory closures in China will continue to hurt companies well beyond the first quarter.

Several better-than-expected reports on the economy helped raise optimism earlier this week that the outbreak is not having a broad impact on the U.S. economy, but Friday’s clunker from IHS Markit fueled doubts.

Preliminary data suggest U.S. business activity pulled back in February, the first month of contraction since 2013. Economists had expected the survey of manufacturers and service companies to show another month of growth.

Much of the drop-off was due to a weaker services sector, where output fell for the first time in four years, “but manufacturing also ground almost to a halt due to a near-stalling of orders,” IHS chief business economist Chris Williamson said in a statement. He attributed some of the month’s deterioration to the viral outbreak, which weakened demand for travel.

One encouraging sign in the report was that businesses seem optimistic the slowdown will be only short-lived.

Companies like Coca-Cola continue to grapple with the fallout of the outbreak. The beverage giant is the latest big name to warn investors about the potential impact on its finances from the outbreak. China is a big market for the company, and Coke expects a hit of 2 cents per share to its firstquarter profit.

Universal Display, which makes LED-technology for televisions and other products, expects the virus to hurt orders in 2020. The International Air Transport Association said the virus threatens to erase $29 billion of this year’s revenue for global airlines, mostly for Chinese carriers.

South Korea said 204 people have been infected with the virus, quadruple the number of cases it had two days earlier. More than 76,000 people have been infected globally, with most of the cases and deaths centered in China.

The economic data and virus outbreak news led investors to seek the safety of U.S. government bonds, pulling yields sharply lower.