U.S. Stocks Drop on Economic Growth Concerns
31 Januar 2020 - 4:18PM
Dow Jones News
By Will Horner
Global stocks edged lower Friday as investors gauged fresh
economic data and the health of businesses amid continuing worries
about a viral outbreak that threatens to weigh on economic
growth.
The Dow Jones Industrial Average dropped 246 points, or 0.9%,
shortly after the opening bell. The S&P 500 slipped 0.5%. The
tech-heavy Nasdaq Composite fell 0.2%.
The World Health Organization on Thursday declared the
coronavirus -- which has now sickened more than 9,500 people and
killed 213 -- a public-health emergency of international concern.
Although the move highlighted the risk the outbreak posed globally,
the WHO stopped short of recommending restrictions on travel or
trade. Meanwhile, the U.S. saw its first person-to-person
transmission of the virus, escalating concerns about its
spread.
"Everyone is a little bit in the dark," said Lars Kreckel,
global equities strategist at Legal & General Investment
Management. "But the conclusion for most is of a temporary hit to
Chinese GDP -- and so, a bit of a hit to global GDP -- but not
something that will derail global growth. A bump in the road."
The growing contagion has roiled markets in recent days as
investors attempt to assess whether the virus could weigh on
China's economy as businesses are shut, borders closed and flights
suspended, while also gauging the outbreak's wider impact.
The outbreak comes as some big manufacturers have exhibited
signs of strain, raising concerns about the economy.
On Friday, bellwether company Caterpillar said it expects demand
for its machinery to fall this year, citing global economic
uncertainty that crimped sales in the latest quarter. Boeing
earlier this week reported its first annual loss in more than two
decades, as one of its aircrafts has been grounded world-wide. 3M
is planning layoffs during a global restructuring.
Still, fresh data released Friday showed that U.S. consumers
continued to spend in December, continuing a year-long trend.
Household spending rose a seasonally adjusted 0.3% in December from
November. Personal income advanced 0.2% last month. The spending
figures were in line with economists' expectations, while the
personal income number fell short of expectations.
The volatile week for stocks has been marked by explosive moves
in shares of individual companies, particularly some technology
companies.
Amazon.com jumped 9% after the e-commerce giant's fourth-quarter
sales set a record following a strong holiday period. It is poised
to become the fourth U.S. company to close with a $1 trillion
market value.
Tesla's stock continued to soar after the electric car maker
reported its third consecutive quarter of record vehicle
deliveries. Its shares jumped 10% Thursday and continued to edge
higher Friday.
International Business Machines rose about 3.9% after the
technology company said Chief Executive Ginni Rometty is stepping
down following a challenging eight-year run.
"There was a belief going into earnings season that expectations
of tech companies were so high that whatever happened, investors
would be disappointed," said Mr. Kreckel. "That hasn't
happened."
Elsewhere, the pan-continental Stoxx Europe 600 gauge fell 0.5%
while stocks in Asia were mixed. The Hang Seng Index closed 0.5%
lower, and exchanges in China remained shut.
Fresh data on major European economies proved to be a
disappointment on Friday. France's output shrank in the fourth
quarter as strikes and protests against the government's pension
plan curtailed business activity. Italy's economy also contracted,
when economists had been expecting output to remain flat. The euro
area also grew more slowly than economists had forecast.
The weaker-than-expected European data suggests that any boost
to gross-domestic-product growth will take longer to materialize,
said Brian O'Reilly, head of investment strategy at the
Dublin-based Mediolanum International Funds.
"There was definitely a sense of euphoria that was priced into
the market," Mr. O'Reilly said. "But we are not expecting a rebound
in global GDP at least until the middle of this year. We think it
will just take time for confidence to build."
The U.K.'s FTSE 100 index dropped 0.9% after the country
reported its first two cases of the virus. The number of people
sickened by the new coronavirus in China now exceeds the global
total infected with severe acute respiratory syndrome, or SARS,
which killed nearly 800 people after emerging from southern China
in late 2002 and spreading into 2003.
Gunjan Banerji contributed to this article.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
January 31, 2020 10:03 ET (15:03 GMT)
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