U.S. stock futures indicated sharp losses for major indexes on Monday, continuing a drop seen from late last week, as concern grows over the fallout from China’s coronavirus, with the death toll and number of infected climbing dramatically from last week.
How are benchmarks performing?
Dow Jones Industrial Average futures YMH20, -1.42% slid 428 points, or 1.5%, to 28,510, while those for the S&P 500 ESH20, -1.43% slid 49.50 points, or 1.5%, to 3,243.75. Nasdaq-100 futures NQH20, -1.83% tumbled 171.75 points, or 1.9%, to 8,973.75.
Worries about the spread of the China virus drove stocks to their lowest levels in over a week on Friday. The Dow DJIA, -0.58% closed down 170.36 points, or 0.6%, at 28,989.73, while the S&P 500 SPX, -0.90% lost 0.9% to finish at 3,295.47. The Nasdaq Composite Index COMP, -0.93% touched a fresh intraday high in early trade but ended down 0.9% at 9,314.91.
Last week, the Dow lost 1.2%, while the S&P 500 gave back 1% and the Nasdaq fell 0.8%.
What’s driving the market?
The coronavirus is injecting fresh worries into Wall Street investors after China extended this week’s Lunar New Year holiday and took more drastic measures to halt the spread of the illness.
As of Monday, the death count rose to 80, and the number of those infected neared 3,000 confirmed cases, according to reports. In the U.S., there are five confirmed cases, with a handful of infections in other countries, such as France and Japan.
Questions were being raised over the effectiveness of the quarantine on places like Wuhan, China, believed to be the epicenter of the virus. Wuhan’s mayor Zhou Xianwang said that five million of the city’s 11 million people had left the city before the travel ban was imposed. As well, reports that the virus may be infectious during its incubation period may make containment even more difficult.
In short, fears over the coronavirus could provide investors with a reason to sell after a torrid 2019 rally.
“Putting the human tragedy aside, from a cold markets perspective the coronavirus might serve the purpose of taking some of the heat out of a market that has been rising rapidly for months,” said Jasper Lawler, head of research at London Capital Group, in a note to clients.
Looking ahead, the market will be tracking a reading of new home sales for December at 10 a.m. Eastern Time and a report on manufacturing activity in the Dallas area at 10:30 a.m.
Which stocks are in focus?
Nearly half of the 30 Dow components due to report results from the important holiday season, including Apple Inc. AAPL, -0.29% and Microsoft Corp. MSFT, -1.01%, alongside non-Dow companies such as Facebook. Inc. FB, -0.83% and Amazon.com Inc. AMZN, -1.22%.
How are other markets performing?
While most Asian markets were closed for the Lunar New Year, the Nikkei 225 index NIK, -2.03% closed down 2% and crude oil CLH20, -3.01% fell over 3% as well, while demand for perceived safe haven assets rose.
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