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Stocks fell on Friday as worries over the coronavirus’ impact on the Chinese economy outweighed the release of stronger-than-expected U.S. jobs data.
The Dow Jones Industrial Average traded 250 points lower, or 0.9%. The S&P 500 dipped 0.5%. The Nasdaq Composite also slid 0.5%. Those losses put the major averages on pace to snap a four-day winning streak.
China’s National Health Commission on Friday confirmed 31,131 cases of the deadly pneumonia-like virus in the country, with 636 deaths. These numbers have stoked worries about how China’s economy — the second-largest in the world — will be affected. Chinese economic slowed down last year to 6.1% from 6.8% in 2018.
“China is really slowing and that’s worrying people for sure,” said Ed Hyman, chairman of Evercore ISI, on CNBC’s “Squawk on the Street.” “People are not going out. They are not shopping, and that’s what’s hurting particularly China.” Hyman added he sees 0% growth for the Chinese economy this quarter.
A Chinese employee wears a protective mask as he sits in the showroom of an Apple Store after it closed for the day on February 1, 2020 in a shopping district in Beijing, China.
Kevin Frayer | Getty Images
Haibin Zhu, a China equity strategist at JPMorgan, also cut his China GDP growth estimate to 1% for the first quarter.
President Donald Trump tweeted Friday that his Chinese counterpart, President Xi Jinping, is “focused on leading the counterattack on the Coronavirus.”
Caterpillar and Boeing — two bellwether stocks for the global economy — fell 2.3% and 1.2%, respectively. Disney and Goldman Sachs also dropped more than 1% each to pressure the Dow. Materials, energy and health care led the S&P 500 500 lower as each sector declined by at least 0.6%.
The spike in confirmed coronavirus cases and deaths came as investors pored through the latest U.S. jobs report. The U.S. economy added 225,000 jobs in January. Economists polled by Dow Jones expected a print of 158,000 jobs. Wages rose 3.1% on a year-over-year basis, also topping expectations.
“The biggest takeaway for investors is there are no monetary policy implications in this jobs report,” said Jason Thomas, chief economist at AssetMark. “We’re generating enough jobs to keep consumer confidence high and enough wage growth to bring in people from the sidelines.”
But while the report shows a robust labor market, it may not be reflective of the most current economic conditions, Tom Hainlin of Ascent Private Capital Management.
“The challenge for investors is they’re in this foggy place where all the economic data that’s coming in is pre-coronavirus,” he said. “So there’s nothing really materially to grab on to in terms of the data.”
“We won’t get that data probably until the middle of March,” Hainlin said.
The S&P 500 is up more than 3% week to date, and is on pace for its best weekly performance since early June. The Dow is up 3.3% for the week while the Nasdaq has gained 4.1%.
The major averages also reached record highs on Thursday boosted by China’s decision to halve tariffs on a slew of U.S. products. The world’s second-largest economy announced it would halve tariffs on $75 billion worth of U.S. imports on Thursday.
—CNBC’s Sam Meredith and Michael Bloom contributed to this report.
