· Coronavirus concerns drag down Wall Street, but indexes eke out weekly gains
U.S. stocks fell on Friday as fears of economic damage from the spread of the coronavirus intensified, though Wall Street’s major indexes ended well above their session lows.
The Dow Jones Industrial Average fell 256.5 points, or 0.98%, to 25,864.78, the S&P 500 lost 51.57 points, or 1.71%, to 2,972.37, and the Nasdaq Composite dropped 162.98 points, or 1.87%, to 8,575.62.
For the week, the S&P 500 gained 0.6%, the Dow added 1.8% and the Nasdaq rose 0.1%.
The S&P 500 posted its 10th decline in 12 sessions as moves to contain the virus crippled supply chains and prompted a sharp cut to global economic growth forecasts for 2020. Since its record closing high on Feb. 19, the benchmark index has lost more than 12%, wiping out $3.43 trillion from its market capitalization, according to S&P Dow Jones Indices.
Yields on long-dated U.S. Treasuries fell to record lows as investors fled to bonds, whose prices move inversely to their yields. The drop in Treasury yields weighed heavily on shares of financial companies, which tumbled 3.3%. The S&P 500 banks index dropped 4.7%, bringing its total decline for the week to more than 8%.
Data showing a robust pace of hiring in February largely went ignored, given that the data captured little of the impact from the coronavirus. A sharp downturn in later economic and corporate earnings data would likely strike a further blow to U.S. markets, analysts said.
The Cboe Volatility Index, known as “Wall Street’s fear gauge,” hit its highest level since August 2015 during the session but pulled back as stocks pared losses. It ended 2.32 points higher at 41.94.
· Dow futures tumble more than 1,000 points as all-out oil price war adds to coronavirus stress; 10-year Treasury yield drops below 0.5%
Stock futures tumbled in overnight trading Sunday as investors continued to brace for the economic fallout from the spreading coronavirus, while a shocking all-out oil price war added to the anxiety.
Futures on the Dow Jones Industrial Average plunged 1,119 points, pointed to a more than 1,100-point loss at Monday’s open. The S&P 500 futures and Nasdaq-100 futures also indicated significant losses at the Monday open. The sharp declines in the futures market signaled more turbulence ahead after a roller-coaster week that saw the S&P 500 swing up or down more than 2.5% for four days straight.
Amid the market turmoil, bond yields trekked toward new record lows. The yield on the benchmark 10-year Treasury note briefly dropped below 0.5%, before recovering slightly to last trade at 0.5241%.
· Banks cut S&P 500, earnings targets due to coronavirus
Strategists from top U.S. financial firms cut their earnings per share and other targets for the S&P 500 .SPX and globally in recent days as the expected impact of the coronavirus on corporate results escalated. Here are some of the bigger announcements:
** Goldman Sachs (GS.N) on Thursday cut its outlook for S&P 500 corporate earnings in 2020, saying it expects no earnings growth this year. Goldman’s equity strategists now expect aggregate S&P 500 earnings per share of $165, down from the previous estimate of $174
** Wells Fargo Investment Institute on Thursday cut its EPS targets for several equity indexes, including a lowering of the S&P 500 to $166 from the prior view of $172. WFII’s year-end S&P 500 target remains a 3,260 to 3,440 range, “balancing lower earnings but a higher valuation” and they do not anticipate a U.S. economic recession.
Just last week the firm cut its 2020 S&P 500 EPS target to $172 from $175 and cut its year-end target forecast for the S&P 500 index to 3,260-3,440, down from the previous target of 3,340-3,520.
** Citi’s chief U.S. equity strategist, Tobias Levkovich, said in note released Feb. 28 that earnings would fall slightly year-over-year in 2020 under his latest profit forecast for the S&P 500. “We are taking out $10.00 from full-year EPS numbers (reducing our full-year 2020 estimate forecast to $164.25),” he wrote. However, Levkovich left his S&P 500 target price for 2020 unchanged at 3,375.
· Japan stocks drop more than 4%, Australia shares plummet beyond 5% amid oil price war
Stocks in Asia saw steep declines on Monday morning as oil prices plunged amid fears of a price war after OPEC failed to strike a deal with its allies on production cuts, adding to market volatility already brought about by fears surrounding the ongoing coronavirus spread.
The Nikkei 225 in Japan fell 4.43% in early trade, while the Topix was down 4.16%. South Korea’s Kospi also dropped 2.69%.
Meanwhile, stocks in Australia tanked in morning trade, with the S&P/ASX 200 down more than 5%.
The MSCI Asia ex-Japan index traded 1.25% lower.
The moves came as the yield on the benchmark 10-year U.S. Treasury note fell below 0.5%, before seeing a partial recovery as it last traded at 0.5241%.
Reference: Reuters, CNBC
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