Published: Sun, February 02, 2020
Markets | By Otis Pena

Dow tumbles 600 points as coronavirus fears rock stocks

Dow tumbles 600 points as coronavirus fears rock stocks

"The drag on growth operates mostly through lower tourism from China and lower US goods exports to China", Goldman Sachs said. The sell-off erased the S&P 500's gains for January and gave the benchmark index its biggest weekly loss since August. However, stocks pared losses late in the session as the agency director, Robert Redfield, said the risk to the U.S public is low.

Delta, united and American Airlines have suspended all flights between China and the U.S.

The World Health Organization on Thursday declared the coronavirus - which has now sickened more than 9,500 people and killed over 200 - a public-health emergency of worldwide concern.

The major averages saw an uptick in volatility this month as investors grappled with rising tensions between Iran and the US, trade worries with China and the coronavirus scare.

"There is more potential for markets to get affected by the coronavirus than SARS in 2003", said Seema Shah, chief strategist at Principal Global Investors.

"(The virus is) going to take a toll on the global economy, and investors are just starting to realize that now here in the U.S". Amazon reached $1 trillion market capitalization for its second time in history after announcing blockbuster earnings Thursday. The outbreak will cut USA economic growth by 0.4 percentage point in the first quarter as the number of tourists from China plunges and exports to the Asian nation slow, according to Goldman Sachs Group Inc. Energy was by far the worst performer, tumbling 3.18 per cent.

Oil majors Exxon Mobil Corp and Chevron Corp dropped about 4% after disappointing results. While in humans the virus shows up with coughing, fever, and shortness of breath, in stocks it apparently shows up as a 603 point, or 2 percent, drop in the Dow Jones Industrial Average, a 1.59 percent decline in the Nasdaq Composite, and a clammy 1.77 percent drop in the S&P 500.

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For the week, the Dow fell 2.5 per cent, the S&P lost 2.1 per cent and the Nasdaq declined 1.8 per cent.

The yield on the 10-year Treasury dropped 2.44% to 1.52% while yield on the 30-year Treasury fell 0.64% to 2.015%.

Caterpillar reported fourth-quarter sales slumped 8.4 percent year over year and forecast its full-year 2020 profit below Wall Street estimates, citing weak user demand amid an uncertain global economic backdrop.

International Business Machines Corp IBM.N gained 5.09% after it named a new chief executive officer.

Declining issues outnumbered advancing ones on the NYSE by a 3.22-to-1 ratio; on Nasdaq, a 3.44-to-1 ratio favoured decliners.

The S&P 500 had been off to a solid start for the year until concerns about the virus stunted it.

About 9.03 billion shares changed hands in U.S. exchanges, compared with the 7.61 billion daily average over the last 20 sessions.

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