Health care companies led a broad slide in U.S. stocks Friday as increased fears over the spread of a deadly outbreak of coronavirus rattled markets.
The S&P 500 had its worst day since early October and snapped a two-week winning streak.
The sell-off followed news that a Chicago woman has become the second U.S. patient diagnosed with the new virus from China. Health authorities worldwide have been taking measures to try to contain and monitor the coronavirus outbreak.
“It really is a reaction to the widening nature of what’s going on with the coronavirus,” said Lisa Erickson, head of traditional investments at U.S. Bank Wealth Management. “People are concerned about, ultimately, the impact on Chinese growth and perhaps global growth.”
The S&P 500 index fell 30.07 points, or 0.9%, to 3,295.47. The index had been down as much as 1.3% earlier.
The Dow Jones Industrial Average dropped 170.36 points, or 0.6%, to 28,989.73. It briefly slid more than 316 points.
The Nasdaq composite lost 87.57 points, or 0.9%, to 9,314.91. The Russell 2000 index of smaller company stocks slumped 22.78 points, or 1.4%, to 1,662.23.
The stock market has been mostly racking up gains going back to last fall. Before this week, the S&P 500 had only posted a weekly decline three times since October. Even with this week’s decline of 1%, the benchmark index is still up 2% for the month.
Jitters over the potential economic fallout from the coronavirus outbreak intensified Friday as the tally of confirmed cases continued to climb, rising to more than 850. Twenty-six people have died, all in China. The Centers for Disease Control said over 2,000 returning travelers had been screened at U.S. airports and 63 patients in 22 states were being tested.
The virus can cause pneumonia and other severe respiratory symptoms. The World Health Organization has so far held off on declaring the situation a global emergency, which would bring more money and resources to fight it, but also could trigger economically damaging restrictions on trade and travel.
Shares in airlines and several other companies in the travel and tourism industries fell Friday. United Airlines slid 3.5% and American Airlines dropped 4%. Cruise line operator Carnival fell 3.9%.
Drugmaker Bristol-Myers Squibb was among the biggest decliners in the health care sector, shedding 4%. Health insurers also fell. UnitedHealth Group dropped 2.2% and Amgen lost 4%.
Banks and other financial sector companies also took heavy losses, with credit card issuers among the biggest losers.
The price of U.S. crude oil fell 2.5%, dragging down energy stocks. Hess lost 3.2%.
Utilities notched a slight gain as investors shifted money into safe-play, high-dividend stocks and U.S. government bonds. The surge in bond-buying sent yields lower. The yield on the 10-year Treasury note fell to 1.69% from 1.74% late Thursday, a big move.
Investors continued to dig through the latest batch of company earnings reports Friday.
Intel surged 8.1% after the chipmaker blew past Wall Street’s fourth-quarter profit forecasts. The company cited demand for cloud-computing as the key reason for the solid financial results. It also gave investors an upbeat forecast for the first quarter, which helped inject some confidence into the broader market for chips.
American Express rose 2.8% after the credit card issuer and global payments company beat Wall Street’s fourth-quarter profit forecasts.
Shares in two credit card issuers fell sharply after the companies released mixed quarterly snapshots. Discover Financial Services slumped 11.1% after it issued disappointing 2020 guidance. Synchrony Financial skidded 9.9% after its fourth-quarter revenue fell short of analysts’ forecasts.
Next week is shaping up as the busiest week for earnings reports, with roughly 40% of the companies in the S&P 500 due to issue their results for the last three months of 2019.
So far, about 16% of S&P 500 companies have reported their quarterly results. Early indications have been encouraging, with 72.8% of those companies topping analysts’ forecasts for profits, according to S&P Global Market Intelligence.
Even so, the outlook for 2020 earnings isn’t improving as many investors expected, said Sam Stovall, chief investment strategist at CFRA.
“The reason the market was up 13% in the past 3 months is with the expectation that we would see a ramp-up in economic growth and earnings increases, but that has yet to materialize,” he said. “2020 (earnings) estimates have actually come down. They were expected to be up 7.9%, now they’re expected to climb 7.6%.”
Benchmark crude oil fell $1.40 to settle at $54.19 a barrel. Brent crude oil, the international standard, dropped $1.35 to close at $60.69 a barrel.
Wholesale gasoline fell 4 cents to $1.52 per gallon. Heating oil declined 6 cents to $1.73 per gallon. Natural gas fell 4 cents to $1.89 per 1,000 cubic feet.
Gold rose $6.50 to $1,571.10 per ounce, silver rose 29 cents to $18.06 per ounce and copper fell 4 cents to $2.69 per pound.
The dollar fell to 109.24 Japanese yen from 109.52 yen on Thursday. The euro weakened to $1.1029 from $1.1056.
European markets closed with solid gains, helped by a report that showed improvement in manufacturing activity. Germany’s DAX jumped 1.4% and the CAC 40 in France rose 0.9%. Markets were closed in Shanghai and the rest of mainland China, South Korea, Malaysia and Taiwan. Japan’s Nikkei and Hong Kong’s Hang Seng edged higher.
___
AP Business Writer Damian J. Troise contributed.
Please read our comment policy before commenting.