Stocks sink on fears virus will dent global economy
Stocks fell sharply on Wall Street on Friday as fears spread through the markets that a viral outbreak emanating from China will dent global growth.
The Dow Jones Industrial Average skidded more than 600 points, and the S&P 500 index erased its gains for January.
Technology companies, which do a lot of business with China, led the losses. Airlines fell after Delta and American suspended flights to and from the country.
Just two weeks ago, the S&P 500 had closed at an all-time high, having climbed around 13% since early October. A preliminary trade deal signed by the U.S. and China eased a big source of uncertainty in the markets. Volatility was running at 12-month lows and even a dust up between the U.S. and Iran didn’t rock markets.
Then came the viral outbreak in China.
Markets around the globe have sold off on concerns about the potential economic impact of the outbreak. Hong Kong’s Hang Seng fell 5.9% this week and South Korea’s Kospi dropped
5.7%. Markets in Europe declined as well. The U.S. stock market, which had calmly been setting record after record, suffered its worst January since 2016 and its first monthly loss since August.
China’s stock markets reopen Monday after being closed since Jan. 23 for the Lunar New Year. A lot of pent-up selling has likely built up.
Some funds that try to mimic the movements of Chinese indexes are still trading in the United States and elsewhere. These exchange-traded funds, or ETFs, are moving on investors’ expectations for where Chinese stocks would be if markets in mainland China were still open. The Xtrackers Harvest CSI 300 China AShares ETF tracks an index of large stocks that trade in Shanghai and Shenzhen, for example. It’s down roughly 9% since Jan. 23.
“It seems like the equity market is now coming around to the realization that maybe this is something that may linger for some time,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
American Airlines fell 3.2% and Delta Air Lines slipped 2.4%. Apple, which relies on Chinese consumers for sales and factories for supplies, fell 3.9%. Nvidia slid 3.8% and other chipmakers slipped.
Amazon was a rare bright spot in the market Friday. The online retailer surged 7.4% after blowing past Wall Street’s fourth-quarter profit forecasts. The company said Prime membership exploded 50% since it last disclosed that figure in 2018.
The S&P 500 sank 58.14 points (1.8%) to 3,225.52. The Dow Jones industrials fell 603.41 (2.1%) to 28,256.03 The Nasdaq dropped 148 (1.6%) to 9,150.94. The Russell 2000 index of smaller-company stocks fell 34.16 (2.1%) to 1,614.06.