Stocks Give Up Gains, Close Lower; Treasury Yields Fall
February 26 2020 - 5:17PM
Dow Jones News
By Anna Isaac and Alexander Osipovich
The Dow Jones Industrial Average and S&P 500 fell Wednesday
for the fifth consecutive session as investors continued to assess
the economic impact of the coronavirus epidemic.
Both indexes opened sharply higher, and the Dow climbed as much
as 461 points before turning negative in afternoon trading. The
blue-chip index closed with a drop of 123.77 points, or 0.5%, to
26957.59 -- down more than 8% from a week ago.
The S&P 500 slid 11.82 points, or 0.4%, to 3116.39. The
Nasdaq Composite added 15.16 points, or 0.2%, to close at 8980.77,
pushing back into positive territory for the year.
The Dow and S&P 500 are off 5.5% and 3.5%, respectively, in
2020.
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."
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 continued to seek safety in government bonds, pushing
Treasury yields lower. The yield on the benchmark 10-year note fell
to 1.310%, a new all-time low, from 1.328% Tuesday.
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, fell 1% to 27.56 on 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 session. U.S.
oil futures dropped 2.3% to settle at $48.73 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."
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 17:02 ET (22:02 GMT)
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