U.S. stocks were clinging to modest gains afternoon trade Wednesday, as investors watched corporate earnings for clues about economic growth in the face of the coronavirus epidemic emanating from China.
What are major indexes doing?
The Dow Jones Industrial Average DJIA, -0.11% was up 960 points, or 0.2%, at 27,143, while S&P 500 SPX, -0.01% rose 9 points, or 0.3%, to 3,138. The Nasdaq Composite COMP, +0.26% rose 58 points, or 0.7%, to 9,024, pushing it back into positive territory for 2020. The Dow and S&P 500 are still negative year-to-date.
On Tuesday, the Dow dropped 879.44 points, or 3.2%, to 27,081.36, while the S&P 500 shed 97.68 points, or 3%, to close at 3,128.21. The Nasdaq Composite dropped 225.67 points, or 2.8%, to finish at 8,965.61. Tuesday’s decline was the fourth straight for all three major indexes.
What’s driving the market
Equities were recovering some ground Wednesday even as worries about the rapid spread of COVID-19 infections and deaths outside of China continued to hang over markets.
“The last couple of days have seen like an emotional reaction, as apposed to a fact-based reaction,” Oliver Pursche, chief market strategist with Bruderman Asset Management, told MarketWatch. “The reality is that the data is coming in so quickly and changing so quickly,” he said about the spread of the illness beyond Asia. “It’s really difficult to see that changing over then next three or four weeks.”
The S&P 500 index this week suffered its first back-to-back decline of over 3% since the August 2015 China devaluation and registered its worst four-day slide since December 2018.
Investors pointed to signs that central banks and economic policymakers may be more willing to deploy stimulus to cushion the blow from the virus. German Finance Minister Olaf Scholz announced a temporary suspension of the country’s rule on balanced budgets, opening up the possibility of increased fiscal spending from a nation known for its aversion to budget deficits, according to Bloomberg News.
“You’ve had global monetary easing. Now you see China starting to do more on the fiscal side, and there’s rumors of Europe doing more on that front, too,” Nancy Perez, senior portfolio manager at Boston Private, told MarketWatch.
“Why is the market rebounding? It’s just too early to tell what the impact on the U.S. economy is going to be, so the selloff may be somewhat overdone,” said Perez.
See: What Apple, Coca-Cola, Nike and other U.S. companies are saying about the coronavirus outbreak
But the number of confirmed cases and deaths outside China has continued to rise, particularly in Italy, Iran, Japan and South Korea. Stocks extended losses Tuesday after the Centers for Disease Control and Prevention said Americans should prepare for the spread of the coronavirus in the U.S.
Investors remain worried that the tumble in equities over the last few sessions reflects worries that the economic impact of the coronavirus on the U.S. won’t be limited to the first-quarter, partly because the possibility of cascading disruptions across global supply chains could freeze industrial activity not just in China but also in other major manufacturing economies.
See: Businesses worldwide count coronavirus cost. And it’s looking bleak.
In economic data, U.S. new home sales soared 7.9% in January to an annualized pace of 764,000, well above the consensus estimate of 722,000. Low mortgage rates have helped to lift home-buying activity.
COVID-19 case tally: 81,191 cases, 2,768 deaths
Which companies are in focus?
- Dow component Walt Disney Co. DIS, -3.75% saw shares fall 3.1% after the entertainment giant late Tuesday announced that Chief Executive Robert Iger was stepping aside. Bob Chapek, who has served as chairman of Disney Parks, Experiences and Products, succeeded Iger, who is staying on as executive chairman, effective immediately.
- Shares of fast-food chain Wendy’s Co. WEN, -2.61% were down 1.9% after it matched profit expectations for the fourth quarter but delivered guidance that fell slightly short of estimates.
- Lowe’s Cos. LOW, -3.91% shares fell after the home-improvement retailer provided guidance on next fiscal year’s earnings that fell short of consensus projections.
- Salesforce.com Inc. shares CRM, -2.42% fell 2% after the cloud-based enterprise software provider reported fourth-quarter earnings that were shy of Wall Street estimates. The company also announced that co-CEO Keith Block was stepping down.
- Tesla Inc. TSLA, -1.98% shares edged lower after analysts at Evercore ISI said the company could be forced to temporary shutdown Autopilot, the Silicon Valley car maker’s suite of advanced driver-assistance systems, following a government report on a fatal crash.
How are other markets trading?
Oil futures edged lower, with the price of a barrel of West Texas Intermediate crude for April delivery CLJ20, -1.12% on the New York Mercantile Exchange giving up 72 cents, or 1.4%, to trade at $49.17.
In precious metals, Gold GCJ20, -0.41% prices shed $6.10, or 0.4%, to trade around $1,643 an ounce.
Demand for haven assets waned as stock-futures traded higher. The benchmark U.S. 10-year Treasury note yield TMUBMUSD10Y, -1.97% was up a less than a basis point to 1.33%, a day after the long-dated maturity hit a record intraday low of 1.31%. Bond yields fall as prices rise.
The U.S dollar index DXY, +0.20% was up 0.2% against a basket of its currency rivals.
Asian markets added to their drop, with Japan’s Nikkei NIK, -0.79% closing lower by 0.8%. China’s CSI 000300, -1.23% index, which tracks mainland-listed stocks, fell 1.2%.
European stocks came off their lows, with the Stoxx Europe 600 index trading flat. The FTSE MIB in Italy I945, +1.44%, which has the highest number of confirmed coronavirus cases in Europe, rose 1.4%.
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