· Wall Street's sell-off deepens as coronavirus fears intensify
The Dow Jones Industrial Average .DJI ended down 879.44 points, or 3.15%, at 27,081.36 and the S&P 500 .SPX lost 97.68 points, or 3.03%, to finish at 3,128.21. The Nasdaq Composite .IXIC dropped 255.67 points, or 2.77%, to 8,965.61.
The Dow and the S&P 500 tumbled 3% on Tuesday in their fourth straight day of losses as the coronavirus spread further around the world and investors offloaded risky assets as they struggled to gauge the economic impact.
Both averages recorded their biggest four-day percentage losses since the massive sell-off in December 2018, while U.S. 10-year Treasury yields hit a record low.
“The market’s realizing that though the pace of the infections looked like it was slowing, it’s still spreading globally,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in Jersey City, New Jersey.
While investors had hoped the economic impact of the virus would be contained to the first quarter, Cruz said many are now estimating that “it’s going to have an impact on the first half of 2020 and probably beyond.”
The Nasdaq ended the session 8.7% below its record closing high, reached last Wednesday, while the S&P finished 7.6% under its record close achieved the same day. A total 314 of the benchmark’s 500 stocks were in correction territory, traditionally viewed as a 10% drop from their high.
The Dow ended the day 8.4% below its February 12 record close.
In the busiest trading day since December 21, 2018, volume on U.S. exchanges was 12.24 billion shares, compared with the 7.99 billion average for the full session over the last 20 trading days.
Coronavirus fears pull U.S. chip index into a correction
Wall Street’s main semiconductor benchmark tumbled into correction territory on Tuesday in its deepest four-day rout since the financial crisis, as the coronavirus spread further around the world and deepened fears about the global economy.
The Philadelphia Semiconductor Index .SOX dropped 3.2%, bringing the decline from its Feb 19 record high to almost 12%, the worst four-day drop for the index since 2008.
Many investors consider a correction in a security or index to be a drop of 10% or more from its recent peak.
· Dow futures bounce slightly as Wall Street attempts comeback from monster 2-day slide
Stock futures were up just slightly in overnight trading after stocks’ worst two-day rout in more than four years amid heightened concern the coronavirus will upend global economic growth.
Futures on the Dow Jones Industrial Average rose about 123 points, while the S&P 500 futures were up 0.3%.
To be sure, futures trading this early may not be a signal the selling will end on Wednesday. Futures bounced initially Monday evening before the market fell again on Tuesday. Investors are awaiting updates on the coronavirus infections around the world, especially in China, South Korea and Italy.
Stocks plunged for a second day on Tuesday, with the Dow tumbling 879 points, bringing its two-day losses to nearly 1,900 points. The S&P 500 wiped out a whopping $1.7 trillion in just two sessions. The equity benchmark nosedived 6.3% since Monday, suffering its biggest two-day drop since August 2015.
The Cboe Volatility Index, known as the market’s “fear gauge,” spiked more than 11% to close at 27.85, the highest close since Dec. 2018. The VIX, a measure of the 30-day implied volatility of U.S. stocks, crossed 30 at its session high on Tuesday as coronavirus fears rattled the markets.
· European stocks fall amid fears over the coronavirus outbreak; Stoxx 600 down 1.8%
European markets closed Tuesday as investors weighed concerns over the spread of the coronavirus in Italy and across the world.
The pan-European Stoxx 600 closed down 1.8% provisionally, with all sectors in the red. Among the major bourses, France’s CAC was among the worst performers, slumping 2%.
Italy’s FTSE MIB also fell, extending sharp declines seen yesterday, on fears the coronavirus outbreak was spreading beyong the north of the country. The death toll in Italy from the virus, known formally as COVID-19, climbed to seven on Monday.
The World Health Organization (WHO) sent a mission to Italy Tuesday to “support Italian authorities in understanding the situation,” it said in a statement yesterday, citing concerns with the outbreak.
Italian Prime Minister Giuseppe Conte said on Tuesday that Italy is a “safe country for travel,” according to Reuters, as the number of cases in the country surpassed 280.
Meanwhile, on Tuesday afternoon, Switzerland confirmed its first case of the virus, and Austria reported its first two cases.
· Asia stocks fall as Wall Street rout continues amid coronavirus fears
Shares in Asia declined in Wednesday morning trade after stocks on Wall Street plunged for a second day — as investors scrambled for safety amid concerns over the coronavirus outbreak beyond China.
The Nikkei 225 slipped 1.07% in early trade after dropping more than 3% on Tuesday. The Topix index also saw a 1.07% decline. South Korea’s Kospi also fell 1.79% while the Kosdaq dropped 1.62%.
In Australia, the S&P/ASX 200 was down 1.74% as the sectors traded lower.
Overall, the MSCI Asia ex-Japan index traded 0.59% lower.
Hong Kong is set to announce its budget on Wednesday, with Financial Secretary Paul Chan expected to present the 2020-21 Budget to the Legislative Council around 11 a.m. HK/SIN and a news conference set for 3:00p.m. HK/SIN.
On the economic data front, January industrial production data for Singapore is expected to be out around 1:00 p.m. HK/SIN on Wednesday.
Investors will continue watching for updates on the coronavirus outbreak that is spreading outside of China, with a top U.S. health official warning Tuesday it will likely become a global pandemic.
There has been a recent spike in coronavirus cases outside of China, where the disease was first reported. South Korean authorities have confirmed more than 900 cases within the country’s borders. Meanwhile, Italy has been the worst affected country outside of Asia, with more than 200 reported cases. Iran also confirmed at least 12 deaths.
Reference: CNBC, Reuters
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