KEY POINTS

  • Coronavirus has now claimed more than 2,100 lives in China
  • S&P Global Ratings warned Chinese lenders might be stuck with $1.1 trillion in questionable loans
  • The Philly Fed's Manufacturing Business Outlook Survey jumped to 36.7 in February

 

U.S. stocks fell on Thursday on continuing worries about the spread of coronavirus in China.U.S. stocks fell on Thursday on continuing worries about the spread of coronavirus in China.

The Dow Jones Industrial Average fell 128.9 points to 29,219.13 while the S&P 500 dropped 13 points to 3,373.15 and the Nasdaq Composite Index slipped 66.21 points to 9,750.96.

Volume on the New York Stock Exchange totaled 3.34 billion shares with 1,766 issues advancing, 222 setting new highs, and 1,188 declining, with 58 setting new lows.

Active movers were led by Virgin Galactic Holdings (SPCE), NIO Inc. (NIO) and Advanced Micro Devices (AMD)

China’s National Health Commission said on Wednesday that it confirmed 74,576 cases of the coronavirus, along with 2,118 deaths.

Cases have also surged in South Korea to 82.

S&P Global Ratings warned on Thursday that Chinese lenders might be stuck with $1.1 trillion in questionable loans as the virus rips through China’s economy.

Goldman Sachs told clients on Wednesday that investors are underestimating the risks of the coronavirus. “We believe the greater risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the risks of a correction are high,” strategist Peter Oppenheimer wrote in a note. “Equity markets are looking increasingly exposed to near-term downward surprises to earnings growth.”

“This market is just moving on momentum and, at this point, it’s priced close to perfection,” said Christian Fromhertz, CEO of Tribeca Trade Group. “At this point, if we start seeing anything negative, it will probably force some people to start taking profits.”

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, speculated that Thursday’s decline could have been the result of “some larger players hedging against downside risk of the coronavirus spreading. That, on top of the Goldman call that a correction is more likely, has people on edge.”

 Ed Yardeni, president and chief investment strategist at Yardeni Research, said “even as the infection has been largely contained to China, the business ramifications have rippled across the world,"

In economic data, initial jobless claims rose by 4,000 to a seasonally adjusted figure of 210,000 for the week ended Feb. 15, the Labor Department reported on Thursday.

The Philly Fed's Manufacturing Business Outlook Survey jumped to 36.7 in February from 17 in January. It was the highest reading since February 2017.

The Conference Board said its leading economic index rose by 0.8% in January after an 0.3% drop in December. "The LEI's six-month growth rate has returned to positive territory, suggesting that the current economic expansion -- at about 2 percent -- will continue through early 2020," said Ataman Ozyildirim, senior director of economic research at the Conference Board.

Overnight in Asia, markets finished mixed. China’s Shanghai Composite jumped 1.84%, while Hong Kong’s Hang Seng fell 0.17%, and Japan’s Nikkei-225 gained 0.34%.

In Europe markets finished lower, as Britain’s FTSE-100 fell 0.27%, France’s CAC-40 fell 0.8% and Germany’s DAX dropped 0.91%.

Crude oil futures gained 0.9% at $53.77 per barrel and Brent crude slipped 0.08% at $59.26. Gold futures rose 0.65%.

The euro fell 0.14% at $1.0791 while the pound sterling dropped 0.29% at $1.2882.

The yield on the 10-year Treasury plunged 2.87% to 1.525% while yield on the 30-year Treasury dropped 2.18% to 1.972%.