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Stocks plunge on fears virus outbreak will dent the economy

Alex Veiga
Associated Press

The Dow Jones Industrial Average slumped more than 500 points Friday as a virus outbreak that originated in China continued to widen, stoking stock investors’ worries about the potential global economic fallout.

The broad sell-off erased the S&P 500’s gains for January, which began with the market benchmark at record highs. The index is on track for its second weekly loss and its biggest weekly decline since early August.

In this Jan. 9, 2020, file photo trader Michael Milano works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Friday, Jan. 31. (AP Photo/Richard Drew, File)

The virus has infected almost 10,000 people globally in just two months, a troublesome sign of its spread that prompted the World Health Organization to declare the outbreak a global emergency. That designation signals that the virus is now a significant risk to other countries and requires a global response.

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Cases have spiked in China, along with deaths there, and the U.S. is now advising against all travel to the world’s second largest economy.

Technology stocks led the losses. Apple, which relies on Chinese consumers for sales and factories for supplies, fell 3.3%. Nvidia slid 3.1% and other chipmakers slipped.

Airlines were also among the biggest losers. American Airlines fell 3% and Delta Air Lines slipped 2.1% as both companies suspend flights to and from China.

Banks and energy companies also broadly fell. Exxon and Chevron both fell after issuing fourth-quarter results.

Bond prices rose. The yield on the 10-year Treasury fell to 1.53% from 1.55% late Thursday.

Amazon was a standout as a stellar earnings report helped push its market value to slightly more than $1 trillion. Colgate-Palmolive and other makers of household goods held up better than most of the market, as did utilities.

Keeping score

The S&P 500 index fell 1.7% as of 1:32 p.m. Eastern time. The Dow fell 560 points, or 1.9%, to 28,298. The Nasdaq fell 1.5%. The Russell 2000 index of smaller company stocks fell 2%.

Overseas

Markets in Asia were mostly lower, though Japan’s Nikkei 225 rose 1%. Indexes in mainland China open next week after an extended shutdown for the Lunar New Year.

European markets were broadly lower. The United Kingdom is officially leaving the European Union later Friday after more than three years of wrangling over the terms of its exit. It’s the first time a country has left the trading bloc.

Virus status

The new virus outbreak that began in China has now spread to more than 20 nations. Most of the cases and all of the 213 deaths are in China. But, health officials are now increasingly worried as the virus shows signs that it is more easily spreading from person to person.

Feeling feverish

The S&P 500 had been off to a solid start for the year until concerns about the virus stunted it. The technology-heavy Nasdaq is also on track for its second straight weekly loss, though it is still holding on to gains of 2.2% for January.

Prime results

Online retailer Amazon surged 8.3% after blowing past Wall Street’s fourth-quarter profit forecasts. The company said Prime membership exploded 50% since it last disclosed that figure in 2018. Analysts have said that Prime subscribers, who pay $119 a year for faster shipping and other perks, typically spend more of their money at Amazon than at other retailers.

Low tank

Exxon Mobil slipped 4.3% after the country’s biggest oil producer’s profit slid more than 5% in the fourth quarter and fell short of Wall Street forecasts. The company is also facing pressure from falling oil prices as the spreading virus threatens demand.

Recomputing

IBM climbed 4.4% after the technology company said it is changing leadership and putting a cloud computing leader at the helm. Arvind Krishna will take over as CEO in April to replace Ginni Rometty, its first female CEO in the company’s century-long history. Cloud computing has become an increasingly important part of the company’s operations and is a highly competitive area.