Stocks extend steep losses over outbreak

NEW YORK» Major U.S. stock indexes gave up early gains and closed mostly lower Wednesday, extending the market’s heavy losses for the week.

The benchmark S&P 500 fell for the fifth consecutive day after swinging between a 0.6% loss and 1.7% gain. Smaller company stocks bore the brunt of the selling. The bond market continued to flash warning signs as long-term Treasury yields fell further below short-term yields.

Concern about economic fallout from the virus outbreak that originated in China has fueled a sharp sell-off this week that’s wiped out the market’s gains for the year.

“The market is still digesting the full impact of what the coronavirus could mean for global GDP growth and, more important, on earnings growth for a lot of companies,” said Nadia Lovell, a U.S. equity strategist at J.P. Morgan Private Bank.

The S&P 500 index fell 0.4%. It’s on track for its biggest monthly decline since May. The Dow Jones industrial average dropped 123.77 points, for a threeday loss of 2,034 points. A modest rally in technology stocks helped nudge the Nasdaq composite to a 0.2% gain. The Russell 2000 index lost 1.2%.

European markets were mostly higher, but Asian markets fell.

A burst of morning buying had stocks on track for modest gains, but the rally mostly faded by the end of the day, reflecting ongoing concerns among investors about the new coronavirus.

Bond yields headed lower for much of the day, but then recovered mostly. The yield on the 10-year Treasury inched up to 1.34% from 1.33% late Tuesday. The yield on the threemonth Treasury bill edged up to 1.51%. The inversion in the yield between the 10year and the three-month Treasurys is a red flag for investors because it has preceded the last seven recessions.

“The bond market is sending us some warning signals that we should pay attention to, and that’s what you see playing out in the market today,” Lovell said.

Investors have been moving more money into bonds in the wake of the outbreak. Traders are concerned that the global economy could slow.

Energy companies led the selling Wednesday as the price of U.S. crude oil fell 2.3%.

Cruise operators continued falling amid persistent virus fears. Norwegian Cruise Line Holdings fell 7.9%, Royal Caribbean Cruises dropped 8.1% and Carnival slid 7.5%.

Other companies that depend on travelers also declined. Expedia lost 7.1%.

Technology stocks eked out a modest gain. The tech sector was among the worst hit by sell-offs this week because many of the companies rely on global sales and supply chains that could be stifled by the spreading outbreak. Microsoft rose 1.2%, while Adobe rose 1%.

TJX, the parent of retailer TJ Maxx, surged 7.2% after beating Wall Street’s fourth-quarter profit forecasts.

Disney fell 3.8% a day after Bob Iger’s surprise announcement that he will step down as CEO.

Toll Brothers slid 14.6% after the homebuilder reported disappointing fiscal first-quarter profit.

Benchmark crude oil fell $1.17 to settle at $48.73 per barrel. Brent crude oil, the international standard, dropped $1.52 to close at $53.43 per barrel.