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Fear returns to stock market, S&P 500 falls from record S&P 500 spins lower in choppy trading as caution returns
(about 2 hours later)
NEW YORK — Fear swept back through the stock market on Thursday as worries about the viral outbreak in China knocked the S&P 500 off its record high and had it on pace for its worst day this month. NEW YORK — U.S. stocks spun lower in a dizzying day of trading Thursday as worries about the viral outbreak that started in China knocked the S&P 500 off its record high.
Stocks had started the day off higher following another round of stronger-than-expected reports on the U.S. economy, but the market slumped suddenly in the late morning. The S&P 500 was down as much as 1.3% at one point, Treasury yields fell and the price of gold rose, before the moves moderated in the afternoon. The market had started the day off higher following another round of stronger-than-expected reports on the U.S. economy, but it slumped suddenly in the late morning. The S&P 500 was down as much as 1.3% at one point, Treasury yields fell and the price of gold rose, before the moves moderated in the afternoon.
Market watchers said they didn’t see one clear trigger for the movements, which reminded them of the market’s sudden shifts during the height of the U.S.-China trade war, when stocks would swing sharply following tweets from President Donald Trump. By the close of trading, the S&P 500 index had trimmed its loss to 0.4%, down 12.92 points to 3,373.23. The Dow Jones Industrial Average fell 128.05 points, or 0.4%, to 29,219.98, after earlier being down as many as 388 points. The Nasdaq composite lost 66.21, or 0.7%, to 9,750.96.
“You have this push and pull between good U.S. economic data and coronavirus fears,” said Brent Schutte, chief investment strategist at Northwestern Mutual. “You’re playing that back and forth, almost as you were during the trade war, where people were reacting to changes minute by minute.” Market watchers said they didn’t see one clear trigger for the movements, which were reminiscent of the market’s sudden shifts during the height of the U.S.-China trade war, when stocks would swing sharply following tweets from President Donald Trump.
Stocks had been pushing higher for weeks, as investors increasingly believed that stimulus and other efforts by central banks and governments around the world could limit the economic pain created by the virus. China’s central bank on Thursday cut its one-year loan prime rate to 4.05% from 4.15%. “You have this push and pull between good U.S. economic data and coronavirus fears,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management. “You’re playing that back and forth, almost as you were during the trade war, where people were reacting to changes minute by minute.”
But critics said stocks may have run too high, too fast given how uncertain the full impact of COVID-19 will be on the global economy. South Korea’s fourth-largest city, far from the center of the viral outbreak in China, urged residents to stay inside. The worry is that the number of new cases, which has been falling, could re-accelerate. Stocks had been pushing higher for weeks, as investor belief hardened that stimulus and other efforts by central banks and governments around the world could limit the economic pain created by the virus. China’s central bank on Thursday cut its one-year prime rate to 4.05% from 4.15%.
But critics said stocks may have run too high, too fast given how uncertain COVID-19’s full impact on the global economy will be. South Korea’s fourth-largest city, far from the center of the viral outbreak in China, urged residents to stay inside. The worry is that the number of new cases, which has been falling, could re-accelerate.
“Until we get a more definitive sign that the top is in, you’re going to have volatility back and forth and trades off coronavirus headlines,” Schutte said.“Until we get a more definitive sign that the top is in, you’re going to have volatility back and forth and trades off coronavirus headlines,” Schutte said.
KEEPING SCORE: The S&P 500 was down 0.6%, as of 2 p.m. Eastern time, following a roller-coaster day. The index was up 0.1% in the late morning before its sudden shift downward, bottoming out around 11:30 a.m. down 1.3%. One measure of fear in the stock market, which shows how much traders are paying to protect themselves from future swings in the S&P 500, was up nearly 20% at one point in midday trading before more than halving the gain.
The Dow Jones Industrial Average fell 172 points, or 0.6%, to 29,170, and the Nasdaq was down 1%. The increased caution pushed up the price of gold, which touched its highest price since early 2013. Investors also piled into the safety of U.S. government bonds, which in turn weighed on their yields. The 10-year Treasury’s yield sank to 1.52% from 1.57% late Wednesday.
SEEKING SAFETY: In a sign of increased caution in the market, prices for U.S. Treasury bonds jumped. Bond yields fall when their prices rise, and the yield on the 10-year Treasury sank to 1.52% from 1.57% late Wednesday. Besides the toll on human lives, investors worry about how much economic damage the virus will cause. It’s already led to sharp drop-offs in manufacturing, travel and other economic activity in China, and the fear is how long that will last and how far it will spread in the interconnected global economy.
The price of gold also rose, up $8.50 to $1,620.30 per ounce. It touched its highest price since early 2013. The world’s largest shipping company, Denmark’s A.P. Moller Maersk, said Thursday it expects a weak start to the year due to the virus. Air France, meanwhile, said that COVID-19 could mean a hit of up to 200 million euros, or $220 million, for its operating results from February to April. Procter & Gamble’s chief financial officer told analysts that traffic at stores in China, its second-largest market, is down considerably, though it held firm on its forecast ranges for sales and profit this year.
VIRAL IMPACT: Besides the toll on human lives, investors worry about how much economic damage the virus will create. It’s already led to sharp drop-offs in manufacturing, travel and other economic activity in China, and the fear is how long that will last and how far it will spread in the interconnected global economy. The worries overshadowed another set of encouraging data on the U.S. economy. A survey of manufacturers in the mid-Atlantic region jumped to its highest level since February 2017, and a separate report showed leading economic indicators in the United States rose more in January than economists forecast. The number of workers applying for jobless claims rose a touch, but it still remains low.
The world’s largest shipping company, Denmark’s A.P. Moller Maersk, said Thursday it expects a weak start to the year due to the virus. Air France, meanwhile, said that COVID-19 could mean a hit of up to 200 million euros, or $220 million, for its operating results from February to April. ViacomCBS slid 17.9% for the largest loss in the S&P 500 after it reported weaker results for the latest quarter than analysts expected.
ENCOURAGING ECONOMIC SIGNS: A survey of manufacturers in the mid-Atlantic region by the Federal Reserve Bank of Philadelphia jumped to its highest level since February 2017. It was much stronger than economists expected. The biggest gainer, meanwhile, was E-Trade Financial, which jumped 21.8% after Morgan Stanley said it would buy the online brokerage.
Another report showed that leading economic indicators in the United States rose more in January than economists forecast. European markets were lower, with Germany’s DAX losing 0.9% and France’s CAC 40 down 0.8%. The FTSE 100 in London dipped 0.3%.
Thursday’s reports follow other data points this month showing stronger housing-construction activity and jobs growth than markets expected.
MARKETS ABROAD: European markets were lower, with Germany’s DAX losing 0.9% and France’s CAC 40 down 0.8%. The FTSE 100 in London dipped 0.3%.
In South Korea, where authorities reported the country’s first COVID-19 fatality, the Kospi sank 0.7%. Japan’s Nikkei 225 rose 0.3%, the Hang Seng dipped 0.2% and stocks in Shanghai jumped 1.8%.In South Korea, where authorities reported the country’s first COVID-19 fatality, the Kospi sank 0.7%. Japan’s Nikkei 225 rose 0.3%, the Hang Seng dipped 0.2% and stocks in Shanghai jumped 1.8%.
RICH CRUST: Domino’s Pizza jumped24.6% after the company delivered better-than-expected fourth-quarter profit and surprisingly good sales. The company handily beat a key sales measure as it faces increasing competition from food delivery companies like DoorDash. . Benchmark crude oil rose 49 cents to settle at $53.78 a barrel. Brent crude oil, the international standard, rose 19 cents to $59.31 per barrel. Wholesale gasoline rose 1 cent to $1.67 per gallon. Heating oil declined 1 cent to $1.70 per gallon. Natural gas fell 4 cents to $1.92 per 1,000 cubic feet.
BIG DEAL: E-Trade surged23.3%after Morgan Stanley said it will buy the online brokerage firm for $13 billion, one of the biggest deals on Wall Street since the financial crisis. Morgan Stanley fell3.9%. The deal comes less than a year after a vicious fight for customers resulted in discount brokers like E-Trade slashing or eliminating fees. Rival Charles Schwab is in the process of buying TD Ameritrade. Gold rose $9.10 to $1,616.60 per ounce, silver rose 2 cents to $18.31 per ounce and copper fell 1 cent to $2.60 per pound.
EARNINGS: Investors continued digesting a steady flow of corporate earnings. Zillow Group jumped17.4%and Avis Budget Group also soared13.5%after reporting solid financial results. Online postage provider Stamps.com surged61.5%after blowing away analysts’ forecasts. ViacomCBS fell17.3%and Boston Beer slid8.3%after reporting disappointing results. The dollar rose to 112.06 Japanese yen from 111.58 yen on Wednesday. The euro weakened to $1.0790 from $1.0796.
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AP Business Writers Damian J. Troise and Yuri Kageyama contributed.AP Business Writers Damian J. Troise and Yuri Kageyama contributed.
Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.