Dow drops more than 250 points as confirmed coronavirus cases jump

FAN Editor

Stocks fell on Friday after the number of new coronavirus cases escalated, fueling worries over a pronounced global economic slowdown.

The Dow Jones Industrial Average traded 280 points lower, or 0.96%. The S&P 500 slid 1% while the Nasdaq Composite declined by 1.4%. 

Friday’s losses put the major averages on pace for their first weekly losses in three weeks. The Nasdaq is down roughly 0.9% week to date. The Dow and S&P 500 are both down at least 1.1% for the week. 

Microsoft and Chevron fell more than 1.5% each to lead the Dow lower. The S&P 500 was pressured by a 1.4% drop in the tech sector. Facebook, Amazon, Google-parent Alphabet and Apple all traded at least 0.9% lower to drag the Nasdaq lower. 

China’s National Health Commission reported more than 75,00 confirmed cases and over 2,000 deaths on the mainland. More than 800 new cases were reported in China overnight. South Korea reported 52 new cases on Thursday to take its total to 150.

“Even if the outbreak recedes, global growth is still set to fall to zero in the first quarter, before bouncing back over the remainder of the year,” Peter Berezin, chief global strategist at BCA Research, said in a note. “Thus, a near-term hit to corporate earnings now looks unavoidable.”

Traders work on the floor of the New York Stock Exchange, January 27, 2020.

Spencer Platt

The spread of the virus is already taking its toll on the Chinese economy. Data from the China Passenger Car Association showed auto sales plummeted by 92% in the first two weeks of February. Some U.S. companies, including Apple, have also warned this week about possible revenue headwinds due to the virus. 

IHS Markit also said activity in the U.S. services sector hit its lowest level in more than six years, noting confidence was “subdued” to the coronavirus. 

Traders plowed money into safe havens such as Treasurys and gold on Friday. The 30-year Treasury bond yield hit a record low, breaking below 1.9%. Yields move inversely to prices. Gold hit a fresh seven-year high, gaining 1.7% to $1,647.40.

U.S. stocks are coming off a negative session driven by a sudden midday sell-off which confounded traders and brought markets back from previous record highs. The Dow also notched its fourth decline in five sessions.

“Markets had their first real ‘shot across the bow’ in a few weeks time, with a sudden swift pullback to multi-day lows, which was severe enough to cause some rapid buying of volatility,” said Mark Newton, managing member at Newton Advisors. “Yet breadth was never down that much even at the height of intraday losses, and ended up positive on the day.”

On the data front, January existing home sales figures are expected at 10 a.m. ET.

In corporate news, Deere shares popped more than 6% on quarterly earnings that beat analyst expectations. Dropbox soared more than 22% after posted a profit that topped estimates.

—CNBC’s Elliot Smith contributed to this report.

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