Thursday's Stock Market Close: US Equities Drop After China Reported Spike In Virus Cases

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KEY POINTS

  • Almost 60,000 people have infected by coronavirus in China
  • Trump officials fear China may be under-reporting the true number of viral infections
  • Initial jobless claims inched up by 2,000 to 205,000 last week

U.S. stocks closed lower on Thursday as Chinese health officials reported a sudden spike in confirmed coronavirus cases.

The Dow Jones Industrial Average dropped 127.69 points to 29,423.73 while the S&P 500 fell 5.39 points to 3,374.06 and the Nasdaq Composite Index tumbled 13.99 points to 9,711.97.

Volume on the New York Stock Exchange totaled 2.77 billion shares with 1,440 issues advancing, 214 setting new highs, and 1,498 declining, with 45 setting new lows.

Active movers were led by Ford Motor (F), Advanced Micro Devices (AMD) and Cisco Systems (CSCO).

China said that it confirmed 15,152 new cases and 254 additional deaths from the coronavirus – now called Covid-19 — after local health officials in Hubei province, the epicenter of the outbreak, used a new diagnosis methodology. China now has almost 60,000 confirmed cases, while at least 1,367 have died.

“While China and travel-focused companies are obviously most vulnerable, as long as the economic impact on the U.S. economy remains modest expect U.S. equities to maintain their relative immunity to the virus,” said Alec Young, managing director of global markets research at FTSE-Russell. “Should that firewall begin to break, volatility is likely to increase significantly.”

Jon Adams, investment strategist at BMO Global Asset Management, said there is still some hope in the market that the number of cases has stabilized to some degree. But we do think this will continue to hang over the market.”

Some worry China is under-reporting the true magnitude of the infections.

A senior official in the Trump administration official told CNBC the U.S. does “not have high confidence in the information coming out of China.” The official also said China “continues to rebuff American offers of assistance.”

Keith Buchanan, portfolio manager at GLOBALT, said bond markets have been more worried about the coronavirus than the stock market. “Traditionally, the fixed income market has been more accurate than equities predicting future growth. It’s something to watch,”

In the U.K., Sajid Javid resigned as chancellor of the exchequer as Prime Minister Boris Johnson reshuffled his cabinet.

In U.S. economic data, initial jobless claims inched up by 2,000 to 205,000 in the week ended Feb. 8, the government said Thursday.

The consumer price index edged up 0.1% in January, the smallest such gain in four months.

The core consumer price index, which ignores the volatile food and energy sectors, climbed by 0.2% from the prior month, and 2.3% from a year ago.

Cisco (CSCO) dropped 5.23% after the company posted another decline in fourth quarter revenue.

Overnight in Asia, markets finished lower. China’s Shanghai Composite dropped 0.71%, while Hong Kong’s Hang Seng fell 0.34%, and Japan’s Nikkei-225 slipped 0.14%.

In Europe markets finished lower, as Britain’s FTSE-100 dropped 1.09%, France’s CAC-40 fell 0.19% and Germany’s DAX slipped 0.03%.

Crude oil futures gained 0.82% at $51.59 per barrel and Brent crude gained 0.32% at $56.52. Gold futures rose 0.46%.

The euro slipped 0.32% at 1.0839 while the pound sterling gained 0.68% at 1.3048.

The yield on the 10-year Treasury slipped 0.8% to 1.617% while yield on the 30-year Treasury fell 0.96% to 2.071%.