China virus scare, disappointing earnings drive Wall Street lower

About 35 minutes into trading, the Dow Jones Industrial Average was at 29,065.95, down 0.4 per cent. — Reuters pic
About 35 minutes into trading, the Dow Jones Industrial Average was at 29,065.95, down 0.4 per cent. — Reuters pic

NEW YORK, Jan 23 — US stock indexes fell today, as mounting worries over a coronavirus outbreak in China, disappointing corporate earnings and weakness in financial stocks prompted investors to hit the brakes after a strong rally this year.

China put on lockdown today two cities at the epicentre of the coronavirus outbreak that has killed 17 people and infected nearly 600 amid fears the transmission rate will accelerate as hundreds of millions of Chinese travel for the Lunar New Year holidays.

Casino and hotel operators including Wynn Resorts Ltd , Melco Resorts & Entertainment Ltd and Las Vegas Sands Corp, which draw a large portion of their revenue from China, were down between and 1.0 per cent and 4.2 per cent.

Airline stocks were mostly weaker, with Southwest Airlines Co slipping 0.7 per cent after reporting a 21 per cent fall in fourth-quarter profit due to Boeing 737 MAX costs. American Airlines Group Inc fell 2.9 per cent despite reporting a better-than-expected profit.

“There is some concern that this will turn from an epidemic to a pandemic,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.

However, Pavlik added it was a reason for investors to take some profits in an “overbought” market.

Fears of the virus outbreak hitting the global economy have knocked world stock markets off record highs this week even as US earnings reports so far have mostly been in line with expectations.

However, earnings reports today were largely disappointing. Dragging the Dow lower, insurer Travellers Cos Inc fell 4.5 per cent following results.

Financial stocks, down 1.1 per cent, were among the biggest decliners along with the energy and materials indexes.

At 9:57 am ET, the Dow Jones Industrial Average fell 0.60 per cent to 29,010.30. The S&P 500 shed 0.45 per cent to 3,306.82 and the Nasdaq Composite was down 0.30 per cent at 9,355.31.

Chipmaker Texas Instruments Inc fell 1.8 per cent despite forecasting first-quarter revenue above market expectations, but bullish brokerage actions on Micron Technology Inc and Western Digital Corp checked losses in the sector.

Apparel maker VF Corp slumped about 8 per cent after cutting its full-year earnings forecasts on weak demand for its Timberland brand.

Declining issues outnumbered advancers for a 2.73-to-1 ratio on the NYSE and a 2.76-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and three new lows, while the Nasdaq recorded 29 new highs and 28 new lows. — Reuters

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