• Cases of the coronavirus have now been reported in U.S. and France.
  • Chinese cities with about 35 million in population, were placed under lockdown
  • More than 900 people in China have been infected by the virus

U.S. stocks dropped on Friday as the second case of the deadly coronavirus was confirmed in Chicago. Chinese authorities have locked down several cities in the most infected part of their country.

The Dow Jones Industrial Average dropped 170.36 points to 28,989.73 while the S&P 500 slipped 30.09 points to 3,295.45 and the Nasdaq Composite Index dropped 87.57 points to 9,314.91.

For the week, the Dow dropped 1.22%

Volume on the New York Stock Exchange totaled 3.08 billion shares with 829 issues advancing, 234 setting new highs, and 2,108 declining, with 63 setting new lows.

Active movers were led by Intel Corp. (INTC), Advanced Micro Devices (AMD) and NIO Inc. (NIO).

On Friday, the Centers for Disease Control and Prevention said a Chicago resident who returned from Wuhan, the epicenter of the virus in China, was diagnosed with the coronavirus. U.S. Senator John Barrasso (R.-Wyo.) later said the CDC said they are about to confirm a third case of the virus in the U.S.

France has also confirmed two cases of the virus, the first such reports in Europe.

Chinese health officials reported that at least 26 people have died from the coronavirus and more than 900 have become infected. As of Friday, 10 Chinese cities with about 35 million population, were placed under lockdown.

“Make no mistake, this is, though, an emergency in China. But it has not yet become a global health emergency. It may yet become one,” said Tedros Adhanom Ghebreyesus, director-general of WHO.“

“Drastic steps, such as city-wide quarantine measures, can be a double-edged sword when it comes to market impact,” said ING’s senior rates strategist Antoine Bouvet. “On the one hand they signal the authorities are taking the problem seriously and help containment, on the other hand, they help paint a dramatic picture to investors unfamiliar with dealing with this sort of risk.”

IHS Markit said on Friday that its composite purchasing managers index for the U.S. reached a ten-month high of 53.1 in January, from 52.7 in December. A reading above 50 points to growth in business activity.

The European Union and a group of 16 nations including China and Brazil will forming an alliance to settle trade disputes using an appeals and arbitration system at the World Trade Organization.

Intel (INTC) surged 8.13% after its fourth quarter results beat analysts' estimates. The company also gave an upbneat outlook for the first quarter of 2020.

Nick Raich, CEO of The Earnings Scout, said S&P 500 earnings expectations are improving, which is “a reason why stocks continue to rise. The rise in price has been more than the underlying improvement in overall [earnings] expectations. This is what has made stock prices expensive in our opinion.”

Markets in mainland China were closed for the lunar new year holiday. Hong Kong’s Hang Seng gained 0.15% in a shortened trading session, and Japan’s Nikkei-225 rose 0.13%.

In Europe markets traded higher, as Britain’s FTSE-100 climbed 1.04%, France’s CAC-40 rose 0.88% and Germany’s DAX jumped 1.41%.

Crude oil futures dropped 2.18% at $54.38 per barrel and Brent crude edged up 0.26% at $60.85. Gold futures gained 0.34%.

The euro slipped 0.23% at $1.03 while the pound sterling fell 0.35% at $1.3078.

The yield on the 10-year Treasury plunged 3.39% to 1.681% while yield on the 30-year Treasury dropped 2.47% to 2.128%.