U.S. Stocks Open Lower on Economic Growth Concerns
January 31 2020 - 10:09AM
Dow Jones News
By Will Horner
U.S. stocks fell Friday as investors gauged fresh economic data
and the health of businesses amid continuing worries about a viral
outbreak that threatens to weigh on economic growth.
The Dow Jones Industrial Average fell 227 points, or 0.7%, to
28631 shortly after the opening bell. The S&P 500 dropped 0.4%
and the Nasdaq Composite fell less than 0.1%.
Elsewhere, the pan-continental Stoxx Europe 600 gauge fell 0.3%
while stocks in Asia were mixed. The Hang Seng Index closed 0.5%
lower, and exchanges in China remained shut.
Fresh data on major European economies proved to be a
disappointment on Friday. France's output shrank in the fourth
quarter as strikes and protests against the government's pension
plan curtailed business activity. Italy's economy also contracted,
when economists had been expecting output to remain flat. The euro
area also grew more slowly than economists had forecast.
The weaker-than-expected European data suggests that any boost
to gross-domestic-product growth will take longer to materialize,
said Brian O'Reilly, head of investment strategy at the
Dublin-based Mediolanum International Funds.
"There was definitely a sense of euphoria that was priced into
the market," Mr. O'Reilly said. "But we are not expecting a rebound
in global GDP at least until the middle of this year. We think it
will just take time for confidence to build."
Amazon.com shares jumped almost 9% after the e-commerce giant's
fourth-quarter sales set a record following a strong holiday
period.
"There was a belief going into earnings season that expectations
of tech companies were so high that whatever happened, investors
would be disappointed," said Mr. Kreckel. "That hasn't
happened."
Caterpillar shares fell 2.4% after the company said it expects
demand for its machinery to fall this year.
Colgate-Palmolive advanced over 7.7% after the consumer-goods
company reported a larger-than-expected climb in sales.
International Business Machines rose 3.9% after the technology
company said Chief Executive Ginni Rometty is stepping down
following a challenging eight-year run.
The World Health Organization on Thursday also declared the
coronavirus -- which has now sickened more than 9,500 people and
killed 213 -- a public-health emergency of international concern.
While the move highlighted the risk the outbreak posed globally,
the WHO stopped short of recommending restrictions on travel or
trade. Meanwhile, the U.S. saw its first person-to-person
transmission of the virus, escalating concerns about its
spread.
The U.K.'s FTSE 100 index dropped 0.7% after the country
reported its first two cases of the virus. The number of people
sickened by the new coronavirus in China now exceeds the global
total infected with severe acute respiratory syndrome, or SARS,
which killed nearly 800 people after emerging from southern China
in late 2002 and spreading into 2003.
The growing contagion has roiled markets in recent days as
investors attempt to assess whether the virus could weigh on
China's economy as businesses are shut, borders closed and flights
suspended, while also gauging the outbreak's wider impact.
"Everyone is a little bit in the dark," said Lars Kreckel,
global equities strategist at Legal & General Investment
Management. "But the conclusion for most is of a temporary hit to
Chinese GDP -- and so, a bit of a hit to global GDP -- but not
something that will derail global growth. A bump in the road."
Meanwhile, Amgen fell more than 3% after the drugmaker's 2020
guidance for earnings disappointed investors.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
January 31, 2020 09:54 ET (14:54 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Aug 2024 to Sep 2024
FTSE 100
Index Chart
From Sep 2023 to Sep 2024