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Stock Market Jitters Persist After Wall Street’s Worst Drop in 2 Years Stock Markets Stabilize After an Outbreak-Inspired Slump
(32 minutes later)
Stocks in the United States were unsteady on Tuesday, a day after concerns that the spreading coronavirus would hit global growth prompted Wall Street’s worst decline in two years. SHANGHAI — Global stocks stabilized on Tuesday, a day after fears of the spread of the new coronavirus outside China spooked investors into a worldwide sell-off.
Investors in the United States and abroad have been trying to gauge the extent of the coronavirus outbreak and its potential impact on the world’s economy. As they faced evidence that the outbreak is spreading outside of China, those traders reacted on Monday by pushing the S&P 500 down 3.4 percent, its worst single-day performance since February 2018. European markets recorded their worst session since 2016. Shares fell in most markets in Asia, led by Japan, which had closed for a holiday on Monday and missed that day’s drop. The Nikkei 225 index tumbled more than 3.3 percent. Most other Asian markets fell at a much slower pace.
On Tuesday, that selling moderated somewhat. The S&P 500 drifted from positive to negative territory in early trading and shares fell in Europe and Asia. But shares in Europe opened mostly higher, suggesting investors’ nerves had steadied. Futures trading indicated that American markets would rise when they opened on Tuesday.
Investors could face more wild rides as the coronavirus outbreak spreads further, crimping consumer demand and snarling the world’s supply chains. UBS said on Tuesday that it was recommending investors switch to emerging-market stocks, and warned that holding shares in European companies presented a particular danger. The signs of stabilization followed a difficult Monday, when investors began to more fully comprehend the extent of the outbreak. On Wall Street, the S&P 500 index fell 3.4 percent on Monday, its worst single-day performance since February 2018. European markets recorded their worst session since 2016.
“The emergence of a large number of new cases in Italy has materially increased the risk of a sharp drop in consumer and business confidence in Europe, and potentially North America too if more cases are confirmed there in the coming days,” Mark Haefele, the chief investment officer at UBS’s global wealth management operations, said in an investment report. Investors could face more wild rides as the coronavirus outbreak spreads further, crimping consumer demand and snarling the world’s supply chains. UBS said on Tuesday that it was recommending investors switch to emerging market stocks, and warned that holding shares in European companies presented a particular danger.
Updated Feb. 10, 2020Updated Feb. 10, 2020
Trading in government bonds continued to reflect those concerns. The yield on the 10-year Treasury note stood at 1.37 percent early on Tuesday, near its record-low closing of 1.36, a level touched back in July 2016. “The emergence of a large number of new cases in Italy has materially increased the risk of a sharp drop in consumer and business confidence in Europe, and potentially North America too if more cases are confirmed there in the coming days,” Mark Haefele, the chief investment officer at UBS’s global wealth management operations, said in an investment report.
Falling yields can reflect broad-based expectations that growth will weaken. UBS also said that it was recommending investors buy shares in companies that cater to “stay-at-home” consumers, like electronic commerce and food delivery services.
President Trump, traveling in New Delhi on Tuesday, joked with business leaders that their investments in the United States had made them a lot of money “except for yesterday,” noting the market drop, according to a pool report. Mentioning the coronavirus outbreak, he said, “We think we’re in very good shape in the United States.”
New outbreaks of the virus in Europe, Asia and the Middle East are renewing fears of a coming global pandemic. Market analysts in recent days have issued new warnings that the outbreak could drag down economies around the globe.
Economists at JPMorgan Chase wrote that they expected global growth to slow to a 1 percent annual pace in the first three months of the year, which would be the weakest quarter of the economic expansion that is now more than a decade long. In the United States, the general estimate for first-quarter domestic growth has slipped.
Officials at the Federal Reserve and within the Trump administration are watching the coronavirus situation closely, although the central bank’s main tool for stoking growth — lowering interest rates — might not help much if factories are not producing goods and supply chains are disrupted by quarantines.
In Europe, Germany’s DAX was 0.5 percent lower, and Britain’s FTSE 100 lost 0.7 percent.
Shares fell in most markets in Asia, led by Japan, which was closed for a holiday on Monday. The Nikkei 225 index tumbled more than 3.3 percent. Most other Asian markets fell at a much slower pace.
In China, the Shanghai stock market fell 0.6 percent, while the market in the city of Shenzhen rose by about half a percent.In China, the Shanghai stock market fell 0.6 percent, while the market in the city of Shenzhen rose by about half a percent.
Both markets had been fairly insulated from the global selling on Monday, a stability that analysts attributed to Beijing policies such as ordering fund managers not to sell more shares than they buy. Beijing has a history of tolerating share price declines more readily if they look like echoes of Wall Street’s activity, and that appeared to be true on Tuesday as well.Both markets had been fairly insulated from the global selling on Monday, a stability that analysts attributed to Beijing policies such as ordering fund managers not to sell more shares than they buy. Beijing has a history of tolerating share price declines more readily if they look like echoes of Wall Street’s activity, and that appeared to be true on Tuesday as well.
The Hong Kong market was little changed, after falling more than the mainland markets on Monday.The Hong Kong market was little changed, after falling more than the mainland markets on Monday.
In South Korea, shaken by the world’s second-largest outbreak of the virus outside China, share prices rebounded on Tuesday morning after enduring one of the sharpest drops of any large market around the world the day before. They ended up 1.2 percent.In South Korea, shaken by the world’s second-largest outbreak of the virus outside China, share prices rebounded on Tuesday morning after enduring one of the sharpest drops of any large market around the world the day before. They ended up 1.2 percent.
Stock markets in commodity-exporting countries continue to suffer losses as traders worry that demand for their goods may decline if more countries suffer the kind of bruising deceleration in economic activity that China has endured. Australia’s stock market fell 1.6 percent on Tuesday.Stock markets in commodity-exporting countries continue to suffer losses as traders worry that demand for their goods may decline if more countries suffer the kind of bruising deceleration in economic activity that China has endured. Australia’s stock market fell 1.6 percent on Tuesday.
Matt Phillips and Jeanna Smialek contributed reporting. In Europe, London’s FTSE 100 was up 0.3 percent early, while German’s DAX rose 0.1 percent.