Allianz Chief Economic Adviser Mohamed El-Erian discusses his outlook for the markets amid coronavirus concerns and the Federal Reserve’s emergency rate cut.
The rollercoaster ride for U.S. equity markets careened into another slide Thursday, with all three of the major averages under pressure from signs the new coronavirus is spreading across the continental U.S.
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The Dow Jones Industrial Average slid by as many as 690 points, or 2.5 percent, one day after rallying 4.5 percent, or 1,173 points — the second-biggest point gain in its history. The S&P 500 and Nasdaq Composite tumbled 2.5 percent and 2.4 percent, respectively.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 26412.5 | -678.36 | -2.50% |
Thursday’s weakness comes after the number of U.S. cases of COVID-19 climbed to 129 and the death toll ticked up to 11, including the first fatality outside of Washington state. Authorities in both Washington and California declared a state of emergency because of the outbreak, which has infected at least 93,090 people worldwide and killed 3,198.
Looking at stocks, airlines were lower after Southwest said it expects first-quarter revenue to take a hit of up to $300 million due to demand destruction caused by the COVID-19 outbreak. On Wednesday, United Airlines said it would cut international flights by 20 percent and domestic flights by 10 percent and Jet Blue announced it would reduce flights and lay off staff.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LUV | SOUTHWEST AIRLINES CO. | 45.22 | -1.71 | -3.64% |
| DAL | DELTA AIR LINES INC. | 46.23 | -2.27 | -4.67% |
| AAL | AMERICAN AIRLINES GROUP INC. | 17.14 | -1.39 | -7.50% |
| UAL | UNITED AIRLINES HLDG. | 56.30 | -3.17 | -5.33% |
An elderly passenger who traveled on the Grand Princess cruise ship, owned by Carnival Corp., from Feb. 11-21 has died from COVID-19, and the cruise operator has said current passengers on its vessels have been quarantined until receiving clearance from medical staff.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CCL | CARNIVAL CORP. | 30.35 | -2.11 | -6.50% |
| NCLH | NORWEGIAN CRUISE LINE HOLDINGS LTD. | 31.12 | -1.88 | -5.70% |
| RCL | ROYAL CARIBBEAN CRUISES | 74.22 | -4.36 | -5.55% |
Meanwhile, drugmakers working on a treatment for COVID-19 were mostly higher.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NVAX | NOVAVAX INC. | 12.09 | +0.77 | +6.80% |
| GILD | GILEAD SCIENCES INC. | 75.07 | -0.94 | -1.24% |
| INO | INOVIO PHARMACEUTICALS | 7.85 | -0.17 | -2.18% |
Elsewhere, General Motors rolled out plans for 13 new electric vehicles that are set to hit the market over the next five years. New battery technology will allow some of those vehicles to travel up to 400 miles on a single charge.
Technology firm HP rejected Xerox’s latest takeover attempt, saying the $24 per share offer undervalues the company.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GM | GENERAL MOTORS COMPANY | 30.27 | -0.88 | -2.83% |
| XRX | XEROX HOLDINGS | 32.31 | -1.38 | -4.10% |
| HP | HELMERICH & PAYNE INC | 33.76 | -1.16 | -3.32% |
On the earnings front, BJ’s Wholesale Club reported its quarterly earnings fell from the same period a year earlier, but forecast 2020 profits and sales will see year-over-year increases.
The video conferencing company Zoom Video Communications reported better-than-expected top- and bottom-line results, but shares were under pressure as investors had expected its full-year forecast to be stronger as COVID-19 forces businesses to rely more on communications technology than travel for important meetings.
Kroger’s quarterly profit topped estimates as its private-label products provided a boost.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BJ | BJS WHSL CLUB HLDGS INC | 20.90 | -0.76 | -3.51% |
| ZM | ZOOM VIDEO COMMUNICATIONS INC | 113.69 | -3.10 | -2.66% |
| KR | KROGER | 30.66 | -0.30 | -0.97% |
Looking at commodities, West Texas Intermediate crude oil jumped 0.5 percent to $47.05 a barrel after OPEC and its allies agreed to cut production by 1.5 million barrels per day to combat a supply glut. Gold gained 1 percent to $1,659.10 an ounce.
Demand for U.S. Treasurys drove the yield on the 10-year note down 1.9 basis points to 0.973 percent.
European markets are under pressure with France’s CAC down 2.4 percent, Germany’s DAX lower by 2.3 percent and Britain’s FTSE off 2 percent.
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Asian markets were sharply higher with Hong Kong’s Hang Seng up 2.1 percent, China’s Shanghai Composite adding 2 percent and Japan’s Nikkei rallying 1.1 percent.
