This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2020/01/27/business/stock-market-today.html

The article has changed 16 times. There is an RSS feed of changes available.

Version 6 Version 7
Stocks Fall as Dangerous Coronavirus Spreads Stocks Have Worst Day Since October Over Coronavirus Worries
(about 4 hours later)
Stocks and oil prices tumbled on Monday, as the spread of a dangerous virus in China raised investor worries about the global economy, just as it was beginning to emerge from a cloud of uncertainty related to the trade war. Just as the world economy appeared to emerge from the uncertainty of the trade war, the spread of the dangerous coronavirus in China has pierced the calm that had settled over financial markets.
The sudden appearance of the coronavirus, which has killed at least 80 people in China and infected others around the globe, pierced a calm that had settled over financial markets in recent months. The S&P 500 closed down 1.6 percent on Monday — its second straight drop, which wiped out much of the market’s gains since the start of the year, and its sharpest decline since Oct. 2, when the trade war was stoking fears of a domestic slowdown.
The S&P 500 dropped more than 1.5 percent in early trading, which would be its worst loss of the year and the steepest fall since early October. President Trump announced the “Phase 1” trade agreement with China on Oct. 11, contributing to weeks of placid trading that pushed stocks to a series of records, making the coronavirus-driven slump all the more jarring.
Stocks with close ties to the Chinese market or the travel industry — or both — bore the brunt of the selling. American Airlines fell more than 4 percent in early trading, and Wynn Resorts, which operates casinos in Macau, a special administrative region of China and a gambling haven for Chinese high rollers, tumbled more than 9 percent. “There was already reason to question whether markets were a bit too buoyant,” said Patrick Chovanec, chief strategist at the investment advisory firm Silvercrest Asset Management. “Sometimes it takes something like this to refocus their attention on potential downsides.”
The selling followed declines of more than 2 percent for the major stock benchmarks in Europe. Tokyo’s benchmark Nikkei 225 index also sank 2 percent, while many other markets in Asia — including the Shanghai Stock Exchange — were closed for the Lunar New Year. Stocks with close ties to the Chinese market or the travel industry — or both — bore the brunt of the selling.
China extended the Lunar New Year holiday by three days until Feb. 2 in an effort to limit travel and contain the outbreak that started in the city of Wuhan. Nearly 3,000 people, mostly in China, have contracted the disease. Five cases have been confirmed in the United States. American Airlines fell more than 5 percent, and Wynn Resorts, which operates casinos in Macau, a special administrative region of China and a gambling haven for Chinese high rollers, tumbled 8 percent.
Concerns about travel restrictions — the Chinese government has effectively sealed off Wuhan and other cities, affecting 56 million people — helped push down oil prices and shares of major oil companies. Brent crude, the international benchmark, slipped below $60 a barrel, its lowest since October. Companies with links to China’s key role in the global technology supply chain also slumped.
The arrival of the outbreak at a crucial period for Chinese business could complicate official plans to reinvigorate growth in the world’s second-largest economy in the aftermath of the trade-war tensions of the last two years. IPG Photonics, which makes lasers for cutting and welding and gets 40 percent of its sales in China, fell more than 6 percent. Two chip makers, Applied Materials and Skyworks Solutions, which sells heavily in the Chinese market, each fell more than 4 percent.
The country’s economy, trying to shrug off its worst slowdown in nearly three decades, is already hurting from the impact on travel and tourism. And consumer spending — which helps fuel the economy over the holiday period — could be dampened as more residents stay home. The S&P’s drop followed declines of more than 2 percent for the major stock benchmarks in Europe. The benchmark Nikkei 225 index in Tokyo also sank 2 percent, while many other markets in Asia — including the Shanghai Stock Exchange — were closed for the Lunar New Year.
The outbreak has China’s leaders under pressure, and some experts have expressed concerns have that the government was too slow to respond and could even make the situation worse. China extended the Lunar New Year holiday by three days until Feb. 2 in an effort to limit travel and contain the outbreak that started in the city of Wuhan. Nearly 3,000 people, mostly in China, have contracted the disease and at least 80 have died. Five cases have been confirmed in the United States.
The sheer size of the Chinese economy makes any upheaval there a serious factor in the pace of worldwide economic growth. Creeping doubts among investors have already helped drive down bond yields in recent weeks. And on Monday, the yield on the 10-year Treasury note, considered a gauge of investor expectations for economic growth and inflation, sank to 1.61 percent, the lowest level of the year. Concerns about travel restrictions — the Chinese government has effectively sealed off Wuhan and other cities, affecting 56 million people — helped push down oil prices and shares of major oil companies.
But as long as the spread of the virus remains contained, the economic implications shouldn’t be dire for the United States. Brent crude, the international benchmark, slipped below $60 a barrel, its lowest since October. Prices have declined about 10 percent since Jan. 17, when China confirmed multiple deaths from the virus. On Monday, the S&P 500 energy sector was down 2.8 percent.
The American economy is relatively insulated from trade, and the important consumer sector is showing signs of ongoing strength. Unemployment remains near 50-year lows and economic growth, while relatively slow, is steady. Inflation and interest rates are low, with signs that those low rates are finally starting to filter through to the broader economy. The outbreak has come at a crucial period for Chinese business, which could complicate official plans to reinvigorate growth in the aftermath of the trade-war tensions of the last two years.
With rates on 30-year fixed mortgages below 4 percent, housing has recently picked up the pace. Sales of previously built homes are at their highest level since early 2018. Home builders are reporting strong demand for more affordable offerings. The country’s economy, trying to shrug off its worst slowdown in nearly three decades, is already hurting from the virus’s effects on travel and tourism. And consumer spending — which helps fuel the economy over the holiday period — could be dampened as more residents stay home.
On Monday, D.R. Horton — the largest American homebuilder, by house closings — reported better-than-expected earnings and revenue numbers for the first quarter. Lennar, the second-largest builder, reported similarly bright numbers earlier this month. The outbreak has China’s leaders under pressure, and some experts have expressed concerns that the government was too slow to respond and could even make the situation worse.
“We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid,” said Donald R. Horton, chairman of the board at D.R. Horton, in a statement announcing the company’s results. The sheer size of the Chinese economy, the second largest in the world after that of the United States, makes any upheaval there a serious factor in the pace of global economic growth. Creeping doubts among investors have already helped drive down bond yields in recent weeks. And on Monday, the yield on the 10-year Treasury note, considered a gauge of investor expectations for economic growth and inflation, sank to 1.60 percent, the lowest level of the year.
But as long as the spread of the virus remains contained, the economic implications should not be dire for the United States.
The American economy is relatively insulated from trade, and the important consumer sector continues to show signs of strength. Unemployment remains near 50-year lows and economic growth, while relatively slow, is steady. Inflation and interest rates are low, with signs that those low rates are finally starting filter through to the broader economy.
With rates on 30-year fixed mortgages below 4 percent, housing has recently picked up the pace. Sales of previously built homes are at their highest level since early 2018. Homebuilders are reporting strong demand for more affordable offerings.
On Monday, D.R. Horton — the largest American homebuilder by house closings — reported better-than-expected earnings and revenue for the first quarter, sending its shares up more than 2 percent. Lennar, the second-largest builder, reported similarly bright numbers earlier this month.
“Across all of our geographies, we’re feeling pretty good about the traffic, pretty good about the demand in the most recent quarter,” Bill Wheat, chief financial officer of D.R. Horton, said on a conference call with analysts.