US Stocks Follow Global Markets Lower 01/27 09:39
U.S. stocks tumbled following a sell-off in markets in Europe and Japan
Monday after China announced a sharp rise in cases of a deadly new virus that
threatens to crimp global economic growth.
NEW YORK (AP) -- U.S. stocks tumbled following a sell-off in markets in
Europe and Japan Monday after China announced a sharp rise in cases of a deadly
new virus that threatens to crimp global economic growth.
Every major U.S. index gave up a significant amount of their gains for
January and bond yields moved lower as investors headed for safer holdings.
Airlines, resorts and other companies that rely on travel and tourism suffered
steep losses. Gold prices rose.
Investors are in a "sell first, ask questions later situation," said Alec
Young, managing director of global markets research at FTSE Russell.
The S&P 500 index slumped 1.4% as of 9:46 a.m. Eastern time. The Dow Jones
Industrial Average dove 420 points, or 1.5%, to 28,571. The Nasdaq fell 1.7%.
The Russell 2000 index of smaller company stocks fell 1.2%.
Most markets in Asia were closed for the Lunar New Year holiday, but Japan's
Nikkei fell 2.03%, its biggest decline in five months. European markets also
slumped. Germany's DAX dove 2.4%.
Chinese health authorities have confirmed 2,744 cases of the coronavirus
along with 81 related deaths as authorities extended a week-long public holiday
by an extra three days as a precaution against having the virus spread still
further. Despite the lockdown that has expanded to 17 Chinese cities, the
coronavirus has spread to a dozen countries, including the U.S.
Global health authorities are increasingly on alert for any new cases.
Besides the threat to people's lives and health, investors are worried about
how much damage the virus will do to profits for companies around the world.
Even if they're thousands of miles away from Wuhan, the interconnected
global economy means U.S. companies have plenty of customers and suppliers in
China. It's the world's second-largest economy, and it accounts for 6% of all
revenue for S&P 500 companies over the last 12 months. That's nearly double any
other country besides the United States, according to FactSet.
"Markets hate uncertainty, and the coronavirus is the ultimate uncertainty
in that no one knows how badly it will impact the global economy," Young said.
Resort operators are reeling as the lockdowns in China directly threaten
their businesses. Wynn Resorts fell 6.3% and Las Vegas Sands shed 6.6%. Those
companies get the majority of their revenue from the Chinese gambling haven of
Macao. MGM Resorts fell 3.8%.
American Airlines fell 6.7% and Delta slipped 3.9% as part of a broad slide
for airlines because of concerns international travel will decline amid the
Booking companies and cruise-line operators are also getting hurt. Expedia
Group fell 3.5% and Carnival fell 3.7%.
Technology companies and banks were also among the losers in the early
going. Apple, which relies on China for supplies and sales, slumped 2.6%.
Citigroup fell 2.1%.
Energy stocks fell broadly as oil prices slipped 1.6%. Schlumberger fell
Utilities and real estate companies held up better than most of the market.
Both sectors are viewed as less-risky and are little-affected by international
issues and developments.
Investors are also dealing with a heavy week of corporate earnings. Apple
will report financial results on Tuesday. Pharmaceutical giant Pfizer and
Starbucks will also report.
Boeing, McDonald's, Coca-Cola and Amazon are also among some of the biggest
names reporting earnings throughout the week that includes 147 S&P 500