Stocks Give Up Gains; Treasury Yields Fall
February 26 2020 - 3:44PM
Dow Jones News
By Anna Isaac and Alexander Osipovich
The Dow Jones Industrial Average turned lower Wednesday, giving
up a strong early advance, as investors continued to assess the
economic impact of the coronavirus epidemic.
The blue-chip index opened sharply higher and climbed as much as
461 points before turning negative in afternoon trading.
It was down 86 points, or 0.3%, in recent trading. The S&P
500 fell 0.1%, while the Nasdaq Composite added 0.3%.
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.
Brazil and Pakistan reported their first cases of the virus on
Wednesday, with Brazil's being the first confirmed case in Latin
America. Officials in Nassau County, outside of New York City, said
they were monitoring 83 people for possible exposure. And
Switzerland-based food giant Nestlé SA suspended overseas business
travel for its employees, one of the strictest such measures taken
by a multinational in response to the epidemic.
Investors remain jittery over any fresh news about outbreaks of
the coronavirus and governments' efforts to contain them.
"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 fell
to 1.305%, from Tuesday's record low settle of 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.
Volatility in U.S. equity markets remained high. The Cboe
Volatility Index, a closely watched measure of market turbulence
known as VIX, gained 1.5% 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.
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 for the fourth consecutive losing session.
U.S. oil futures dropped $1.17 a barrel, or 2.3%, to settle at
$48.73. 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 0.7% 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 15:29 ET (20:29 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.