Stock rally fizzles as virus cases spike
U.S. stocks fell in early trading Thursday as China reported a spike in cases of the new virus that threatens to crimp economic growth and hurt businesses worldwide.
The S&P 500 index fell 0.4% as of 10 a.m. Eastern time. The Dow Jones Industrial Average fell 159 points, or 0.5%, to 29,390. The Nasdaq fell 0.3%. The Russell 2000 index of smaller company stocks fell 0.2%. Markets in Europe and Asia also fell.
China reported the sharp rise in cases and deaths after the hardest-hit province of Hubei took a new approach to classifying and diagnosing the virus, pushing the number of cases worldwide to more than 60,000. The latest figures dashed hopes that the spread of the outbreak was peaking, which had helped lift stocks throughout the week.
The outbreak is already hurting businesses and more of them are warning that the effects will linger through the year. Organizers of the world's biggest mobile technology fair cancelled the event, set to take place in Spain, because of health and safety concerns over the outbreak. Luxury brands like Gucci owner Kering Group as well as mass-market retailers are also warning about declining sales.
"The new coronavirus has reshaped the global economic outlook for at least the next couple of quarters," Capital Economics said in a Thursday research note emailed to CBS MoneyWatch. "From what data are available, it looks like the hit has been big enough for global GDP to contract this quarter."
Tech stocks
Technology stocks bore the brunt of the selling. NetApp plunged 11.4% following disappointing earnings and Cisco fell 6.3%. Companies that rely on consumer spending, including travel-related businesses, also fell broadly.
MGM Resorts International, which gets about 20% of its revenue from the gambling haven of Macau, pulled its profit forecast for 2020. Fashion company Ralph Lauren warned that the viral outbreak cut into fourth-quarter sales by an estimated $55 million to $70 million.
Bond yields remained stable. The yield on the 10-year Treasury held at 1.62%.
Investors headed for safer investments. Utilities and real estate companies held up better than most of the market.
Separately, Alaska Airlines rose 1% after the airline said it will cooperate more closely with American Airlines on West Coast service. The airlines asked for government permission to expand revenue-sharing to cover international flights in Seattle and Los Angeles.