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US close: Dow Jones and S&P 500 record worst week in 12 years

By Iain Gilbert

Date: Friday 28 Feb 2020

US close: Dow Jones and S&P 500 record worst week in 12 years

(Sharecast News) - US stocks turned in a somewhat mixed performance on Friday, with the Dow Jones and S&P 500 registering their worst weekly performances since the Global Financial Crisis in 2008.
At the close, the Dow Jones Industrial Average was down 1.39% at 25,409.36, while the S&P 500 was 0.82% softer at 2,954.22 and the Nasdaq Composite saw out the session mostly flat - up 0.01% at 8,567.37.

The Dow closed 357.28 points lower on Friday, after recording its biggest one-day decline in history in the previous session as major indices dipped into correction territory while the Wuhan coronavirus continued to spread and some more big names warned on guidance.

The benchmark US 10-year Treasury yield was at a fresh record low of 1.167% at the open as concerns about the coronavirus and its impact on the global economy continued to weigh on investor sentiment.

As far as the virus was concerned, New Zealand and Nigeria both reported their first cases overnight, while South Korea confirmed more than 500 new cases and China reported 327 more.

The outbreak has also raised questions regarding potential intervention from the Federal Reserve, with former governor Kevin Warsh telling CNBC that he anticipates global monetary policymakers will soon take action in response to spread of COVID-19.

While St Louis Fed President James Bullard stated rate cuts would only be a possibility if the outbreak turned into a full-blown pandemic, comments made by the Fed late in the session went a way to ease investors' concerns.

Chairman Jerome Powell vowed to "act as appropriate" in order to support the US economy amid the outbreak.

On the macro front, America's shortfall in trade on goods with the rest of the world narrowed unexpectedly at the turn of the year, as imports fell more quickly than exports.

According to the Department of Commerce, in seasonally adjusted terms, the foreign trade deficit on goods shrank from an upwardly revised -$68.7bn in December to -$65.5bn for January, for a month-on-month decline of 4.6%.

Elsewhere, Americans' spending on consumption was a tad lower than expected at the start of 2020 despite a jump in personal earnings.

According to the Department of Commerce, personal incomes and spending increased at a month-on-month pace of 0.6% and 0.2%, respectively. Economists had anticipated increases of 0.3% for both.

Still on data, the slowdown in manufacturing sector activity in the Chicago area eased by much more than expected in February, the results of a closely-followed survey showed, despite signs that the coronavirus was lengthening delivery times substantially.

Market News International's factory sector gauge jumped from a reading of 49.2 in January to 49.0 for this month - comfortably ahead of a consensus projection of 46.3 for the headline index.

Lastly, US consumer sentiment remained heightened during the second half of February despite the coronavirus's spread and associated fears.

The University of Michigan's final sentiment index for February was broadly flat at 101 from an initial reading of 100.9. The gauge of current conditions increased from the prior month to 114.8 and the expectations index rose to 92.1.

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