Stocks Give Up Gains; Treasury Yields Fall
February 26 2020 - 2:16PM
Dow Jones News
By Anna Isaac and Alexander Osipovich
U.S. stocks turned lower on Wednesday, giving up a strong early
advance, as investors continued to assess the impact of the
coronavirus epidemic and its economic fallout.
The Dow Jones Industrial Average opened sharply higher and
climbed as much as 461 points before turning negative.
The blue-chip index was down 130 points, or 0.5%, in
early-afternoon trading. The S&P 500 fell 0.4%, while the
Nasdaq Composite slipped 0.2%.
Investors were hoping for markets to stabilize after the Dow
fell more than 1,900 points Monday and Tuesday in its largest
two-day point decline on record. Markets were spooked this week by
a growing number of coronavirus cases outside China and fears that
the epidemic would dent corporate earnings and global growth.
"This is a time of peak uncertainty for coronavirus," said
Edward Park, deputy chief investment officer at Brooks Macdonald.
"We don't yet know the size of how much it's spread or the
mortality rate. That's what markets are reacting to, peak
uncertainty, rather than facts."
Investors continued to seek safety in government bonds, pushing
Treasury yields lower. The yield on the benchmark 10-year note
ticked down to 1.317%, from Tuesday's all-time low 1.328%.
Yields have been under pressure in recent days in part because
of a growing expectation among investors that the Federal Reserve
may cut interest rates at least two times later this year.
Still, the situation remains highly fluid, with investors
jittery over any fresh news about outbreaks of the coronavirus and
governments' efforts to contain them.
The recent surge in volatility in U.S. equity markets showed
some signs of abating. The Cboe Volatility Index, a closely watched
measure of market turbulence known as VIX, fell nearly 4%
Wednesday, a day after hitting its highest levels in more than a
year.
In Europe, the pan-continental Stoxx Europe 600 was flat for the
day after wavering between gains and losses.
Earlier, Asian markets closed lower. Japan's Nikkei 225 index
shed 0.8% to reach its lowest level since October. Australia's
S&P/ASX 200 dropped 2.3% and Korea's Kospi retreated 1.3%.
Crude oil prices fell, putting the oil market on track for its
fourth consecutive losing session. U.S. oil futures fell 1% to
$49.41 a barrel. Oil futures had picked up earlier Wednesday, after
fresh data showed U.S. crude inventories rising less than expected,
but then gave up their gains.
Deaths and confirmed cases of the coronavirus have continued to
climb outside China -- notably in Italy, Iran, Japan and South
Korea. Concerns among investors that the virus will spread further,
disrupting the global economy, triggered the two sharp consecutive
stock selloffs this week.
Many European and Asian benchmarks, including those in Germany,
Japan, and South Korea are now solidly in negative territory for
the year. Germany's DAX is down more than 3% year-to-date, while
Hong Kong's Hang Seng Index and the Kospi in Seoul have both
declined more than 5%.
"The market is pricing in a significant slowdown in global
growth and corporate earnings," said Ong Zi Yang, senior macro
analyst at FSMOne.com in Singapore. "It is hard to quantify the
economic impact now but there will definitely be a slowdown."
In currencies, the British pound fell 0.8% against the dollar
amid concerns about the government's mandate for trade talks with
the European Union, which is due to be made public Thursday.
Chong Koh Ping contributed to this article.
Write to Anna Isaac at anna.isaac@wsj.com and Alexander
Osipovich at alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
February 26, 2020 14:01 ET (19:01 GMT)
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