Stocks rose on Tuesday following the market’s biggest sell-off in more than three months as investors grapple with lingering fears over a possible coronavirus outbreak.
The Dow Jones Industrial Average rose 100 points, or 0.4%. The S&P 500 climbed 0.5% while the Nasdaq Composite advanced 0.8%.
“Stocks are attempting to stabilize and rebound although the effort is quite tentative and lacks conviction,” said Adam Crisafulli, founder of Vital Knowledge, in a note.
The Dow and S&P 500 had their biggest drop since October on Monday. The Dow plunged more than 450 points while the S&P 500 logged in its first pullback of at least 1% in 74 sessions. The Nasdaq also had its biggest one-day decline since August amid fears the spreading coronavirus could hurt the global economy.
Traders work on the floor of the New York Stock Exchange (NYSE) on January 27, 2020 in New York City.
Spencer Platt | Getty Images
In China, where the virus originated from, the virus has killed more than 100 people while over 4,500 have been infected. In the U.S. — where some coronavirus cases have been confirmed — the State Department advised Americans to “reconsider travel to China due to the novel coronavirus.”
President Donald Trump also said the U.S. is in “very close communication” as it relates to the virus.
Investors worry the current situation in China is similar to the severe acute respiratory syndrome, or SARS, outbreak of 2003. Stocks also fell back then amid the outbreak’s uncertainty before recovering.
“From an investment perspective the largest challenge around the Wuhan coronavirus is the lack of historical comparisons that might help sensibly frame the risks,” said Nicholas Colas, co-founder of DataTrek Research. He noted, however, comparing the current situation to the SARS outbreak may not work given how much Chinese demographics and economic dynamics have changed.
“China is in a better position to address the current crisis relative to SARS, both because its population is now more affluent as well as the country’s improvements to its national health care system,” Colas added.
Meanwhile, the corporate earnings season continued with 3M, Pfizer and Harley-Davidson releasing their quarterly numbers. Pfizer and 3M posted disappointing earnings for the previous quarter, sending their shares down 2.6% and 2.8%, respectively. Harley-Davidson’s earnings per share beat expectations, but a disappointing revenue figure helped send the stock down 4.6%.
Of the S&P 500 companies that have reported thus far, 67% have posted better-than-expected earnings, FactSet data shows. Apple is among the S&P 500 components set to report after Tuesday’s close.
—CNBC’s Michael Bloom contributed to this report.
