Stocks Give Up Gains; Treasury Yields Fall

Date : 02/26/2020 @ 7:43PM
Source : Dow Jones News

Stocks Give Up Gains; Treasury Yields Fall

By Anna Isaac and Alexander Osipovich 

U.S. stocks turned lower 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 in afternoon trading.

The blue-chip index was down 91 points, or 0.3%, in recent trading. The S&P 500 fell 0.3%, while the Nasdaq Composite added less than 0.1%.

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 reported a case of the virus on Wednesday -- the first confirmed case in Latin America -- while officials in Nassau County, outside of New York City, said they were monitoring 83 people for possible exposure. 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 ticked down to 1.314%, 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.

Volatility in U.S. equity markets remained high. The Cboe Volatility Index, a closely watched measure of market turbulence known as VIX, fell 0.4% 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 dropped 2.7% to $48.53 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 14:28 ET (19:28 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.


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