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US open: Stocks slide as coronavirus takes centre stage

By Iain Gilbert

Date: Monday 27 Jan 2020

US open: Stocks slide as coronavirus takes centre stage

(Sharecast News) - US stocks opened sharply lower on Monday as confirmed worldwide cases of the Wuhan coronavirus hit 2,862 and were continuing to rise.
As of 1540 GMT, the Dow Jones Industrial Average was down 1.34% at 28,601.46, while the S&P 500 was 1.45% weaker at 3,247.65 and the Nasdaq Composite started out the session 1.76% softer at 9,151.14.

The Dow opened 388.27 points lower on Monday after rounding out the last week in the red as a result of the World Health Organization branding the virus an "emergency in China" albeit not yet globally.

However, since then, the death toll in China had risen to 81, with the WHO's director-general reportedly en route to the source in order to meet with local government and health officials.

SpreadEx's Connor Campbell said: "The rebounding confidence seen last Friday was long gone this Monday, the markets seriously struggling as fears surrounding the coronavirus outbreak intensified.

"On the surface it looked like the Dow Jones managed to avoid the kind of losses seen in Europe, instead falling a comparatively tame 1.4%. However, that 400-point plunge comes following the Dow's late dive last Friday, after the European indices had locked up shop for the weekend."

Iron ore and copper prices also tumbled amid fears of the potential hit to Chinese demand as a result of the outbreak - dragging mining stocks down in the process.

Shares of Expedia, Carnival, American Airlines and Delta all dropped more than 4% as concerns regarding the travel industry ran rife, while stock in trade bellwether Caterpillar was down 2.8%.

Also in the corporate space, Boeing shares were 0.80% lower at the bell after news broke that one of its aircraft had crashed over Afghanistan, although later reports indicated that it was in fact a US military Embraer jet.

On the earnings front, DR Horton shares were up 3.13% in early trade, while Whirlpool was down 1.44% after both firms released their latest quarterly figures.

In parallel, the yield on the benchmark 10-year US Treasury note was down by six basis points to 1.62% as some investors headed for the sidelines.

On the macro front, sales of newly built homes fell 0.4% across the US in December, with buyers somewhat taking their foot off the gas after low mortgage rates drove gains throughout much of 2019.

New single-family houses sold at a seasonally adjusted annual rate of 694,000 last month, according to the Commerce Department. But for the year as a whole, sales climbed 10.3% to 681,000 - the highest total since 2007 when the housing bubble was just starting to deflate ahead of the recession.

Elsewhere, the Dallas Fed Manufacturing Index increased to -0.20 points in January from -3.20 points in December of 2019.

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