Stocks drop after China reports more virus cases
Stocks on Wall Street closed lower Thursday as investors turned cautious after a surge in cases of the new coronavirus in China that threatens to crimp economic growth and hurt businesses worldwide.
The selling marked only the second day this month that the market has declined, and it took the Standard & Poor’s 500 index, Dow Jones industrial average and Nasdaq composite down modestly from Wednesday’s all-time highs.
In the last two weeks, investors had largely set aside worries about the economic effect of the virus outbreak. Markets rallied this week partly because of reports that the number of new cases in China had declined.
Hopes that the spread had peaked were dashed Thursday, when China reported a sharp rise in cases and deaths after Hubei, the hardest-hit province, took a new approach to classifying and diagnosing the virus.
“We’re in a data-dearth period in the sense that we’re not really going to know fully the effects of the impact of that on Asian and Chinese growth, as well as global growth, for at least several weeks,” said Lisa Erickson, head of traditional investments at U.S. Bank Wealth Management. “You’re just going to see some back-and-forth movement [in the market] until that time.”
The S&P 500 fell 5.51 points, or 0.2%, to 3,373.94. The Dow slid 128.11 points, or 0.4%, to 29,423.31. The Nasdaq edged down 13.99 points, or 0.1%, to 9,711.97.
The Russell 2000 index of smaller company stocks rose 4.36 points, or 0.3%, to 1,693.74.
The yield on the 10-year Treasury held steady at 1.62%.
The major U.S. indexes wobbled for much of the day as investors weighed earnings reports and the latest news on the coronavirus.
The change in how Hubei determines and reports cases pushed the number of cases worldwide to more than 60,000. The surge came after two days in which the number of new cases dropped, complicating efforts to understand the trajectory of the outbreak.
Businesses have already been hurting because of the outbreak, and more of them are warning that the effects will linger through the year. Organizers of the world’s biggest mobile technology fair canceled the event, which had been set to take place in Spain, because of health and safety concerns over the outbreak.
Travel-related companies fell broadly Thursday, shedding some of their gains from earlier in the week. Airlines helped pull down industrial-sector stocks. United Airlines fell 1.5%.
Alaska Air Group bucked the trend, rising 1.5% after the airline said it would cooperate more closely with American Airlines on West Coast service. The airlines asked for government permission to expand revenuesharing to cover international flights in Seattle and Los Angeles.
MGM Resorts International, which gets about 20% of its revenue from the gambling haven of Macao, pulled its profit forecast for 2020. The stock sank 5.5%. Cruise line operator Carnival’s shares slid 2%.
Technology and healthcare stocks were among the biggest decliners, along with companies that rely on consumer spending. Cisco Systems dropped 5.2%, Mylan fell 2.3%, and Hanesbrands slid 2.6%.
Household goods makers, utilities, real estate companies and communication services stocks rose.
Fashion company Ralph Lauren slipped 0.6% after it warned that the viral outbreak cut into fourth-quarter sales by $55 million to $70 million.
Benchmark crude oil rose 25 cents to settle at $51.42 a barrel. Brent crude oil, the international standard, gained 55 cents to close at $56.34 a barrel. Wholesale gasoline stayed at $1.58 a gallon. Heating oil stayed at $1.68 a gallon. Natural gas fell 1 cent to $1.83 per 1,000 cubic feet.
Gold rose $7.70 to $1,575.10 an ounce. Silver rose 12 cents to $17.60 an ounce. Copper rose 1 cent to $2.62 a pound.