Register to chat with like-minded investors on our interactive forums.
Daily World Financial News
US Market
The major U.S. index futures are pointing to a notably lower opening on Thursday, with stocks likely to extend the sell-off seen over the past few sessions.
Ongoing worries about the rapid spread of the coronavirus outbreak are likely to continue to weigh on the markets after driving the sell-off seen over the past few days.
Adding to the concerns, the CDC has confirmed a coronavirus infection in an American who reportedly did not have relevant travel history or exposure to another known patient with the disease.
The CDC said the patient’s exposure is currently unknown and could be the first instance of community spread of the virus in the U.S.
Microsoft (MSFT) also warned that it does not expect to meet its revenue guidance for a key segment that includes Windows due to the outbreak.
The software giant joins a growing list of big-name companies that have warned about the potential impact of the coronavirus.
In a note to clients, Goldman Sachs predicted U.S. companies will generate zero earnings growth in 2020 as a result of the outbreak.
President Donald Trump sought to downplay concerns about the coronavirus in a press conference on Wednesday, although critics have accused the president of failing to grasp the severity of the outbreak.
Stocks once again failed to sustain an early move to the upside and succumbed to selling pressure over the course of the trading session on Wednesday. The major averages pulled back well off their early highs and into negative territory.
While the Nasdaq managed to climbed back above the unchanged line, closing up 15.16 points or 0.2 percent at 8,980.77, the Dow slid 123.77 points or 0.5 percent to a four-month closing low of 26,957.59 and the S&P 500 fell 11.82 points or 0.4 percent to a nearly three-month closing low of 3,116.39.
Traders went bargain hunting early in the day, attempting to spark a rebound on Wall Street after stocks failed to sustain an initial upward move on Tuesday and pulled back sharply as the session progressed.
Nonetheless, lingering concerns about the coronavirus outbreak escalating into a pandemic that substantially slows global economic growth kept buying interest somewhat subdued.
Traders subsequently cashed in on the early strength on Wall Street, leading to another pullback by the broader markets.
The pullback by stocks coincided with a rebound by treasuries, which recovered from an early move to the downside and climbed into positive territory.
As a result of the rebound by treasuries, the yield on the benchmark ten-year note ended the session at a new record closing low.
The Trump administration has sought to downplay concerns about the coronavirus, with President Donald Trump accusing the media of exaggerating the situation in order to panic the markets.
Trump said in a post on Twitter this morning that he will be holding a press conference on the coronavirus with CDC representatives and others at 6 pm ET.
Meanwhile, traders shrugged off a Commerce Department report showing new home sales jumped to their highest level in over twelve years in the month of January.
The report said new home sales spiked by 7.9 percent to an annual rate of 764,000 in January after jumping by 2.3 percent to an upwardly revised rate of 708,000 in December.
Economists had expected new home sales to surge up by 2.3 percent to an annual rate of 710,000 from the 694,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 778,000 in July of 2007.
Energy stocks helped to lead the way back to the downside, with another steep drop by the price of crude oil weighing on the day.
Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 3.9 percent, while the NYSE Arca Oil Index and the Philadelphia Oil Service Index both dove by 2.9 percent.
Significant weakness was also visible among housing stocks, as reflected by the 2.8 percent slump by the Philadelphia Housing Sector Index. The index ended the session at its lowest closing level in over four months.
Toll Brothers (TOL) posted a steep loss after the luxury home builder reported fiscal first quarter results that missed analyst estimates on both the top and bottom lines.
Transportation, banking and steel stocks also came under pressure over the course of the session, while tobacco stocks saw considerable strength on the day.
U.S. Economic Reports
First-time claims for U.S. unemployment benefits climbed by more than expected in the week ended February 22nd, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims rose to 219,000, an increase of 8,000 from the previous week’s revised level of 211,000.
Economists had expected jobless claims to inch up to 212,000 from the 210,000 originally reported for the previous week.
Meanwhile, the Commerce Department released a report showing durable goods orders pulled back by much less than expected in the month of January.
The Commerce Department said durable goods orders edged down by 0.2 percent in January after spiking by an upwardly revised 2.9 percent in December.
Economists had expected durable goods orders to slump by 1.5 percent compared to the 2.4 percent jump that had been reported for the previous month.
Excluding a steep drop in orders for transportation equipment, durable goods orders climbed by 0.9 percent in January after a revised 0.1 percent uptick in December.
Ex-transportation orders had been expected to edge up by 0.2 percent compared to the 0.1 percent drop originally reported for the previous month.
A separate report released by the Commerce Department showed the pace of U.S. economic growth in the fourth quarter of 2019 was unrevised from the initial estimate.
The Commerce Department said real gross domestic product increased by 2.1 percent in the fourth quarter, unchanged from the estimate provided last month.
The report showed upward revisions to private inventory investment, exports, federal government spending, and residential fixed investment
However, the upward revisions were offset by downward revisions to non-residential fixed investment, consumer spending, state and local government spending and an upward revision to imports.
At 10 am ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of January. Pending home sales are expected to jump by 2.2 percent in January after plunging by 4.9 percent in December.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Chicago Federal Reserve President Charles Evans is due to give the keynote speech at the Global Interdependence Center in Mexico City at 11:30 am ET.
At 1 pm ET, the Treasury Department is scheduled to announce the results of its auction of $32 billion worth of seven-year notes.
Stocks in Focus
Shares of Marriott (MAR) are moving notably lower in pre-market trading after the hotel chain reported mixed fourth quarter results and said it cannot fully estimate the financial impact from the coronavirus outbreak.
Real estate investment trust Realty Income (O) is also seeing significant pre-market weakness after pricing a public offering of 9 million shares of the company’s common stock at $77.40 per share.
On the other hand, shares of Gilead Sciences (GILD) are likely to see initial strength after the biopharmaceutical company announced the initiation of two Phase 3 clinical studies to evaluate the safety and efficacy of remdesivir in adults diagnosed with the coronavirus.
Online crafts marketplace Etsy (ETSY) is also likely to move to the upside after reporting fourth quarter results that beat analyst estimates on both the top and bottom lines.
Europe
European stocks have moved sharply lower during trading on Thursday as investors worry about the coronavirus outbreak turning into a worldwide pandemic. Two more patients tested positive for coronavirus in England, bringing the total number of U.K. cases to 15.
Elsewhere, Italy has struggled to contain the rapidly spreading outbreak that made it the country with more coronavirus cases outside Asia than anywhere else.
While the French CAC 40 Index has plummeted by 3.1 percent, the German DAX Index and the U.K.’s FTSE 100 Index are both down by 2.9 percent.
Swiss logistics firm Kuehne + Nagel Group has shown a significant move to the downside despite reporting a 7.5 percent increase in full-year core earnings.
Beer manufacturer Anheuser-Busch InBev has also plunged. The company forecast muted growth in 2020 after reporting a drop in fourth-quarter earnings.
Advertising major WPP has also slumped after the company reported a sharp slowdown in its final quarter of the year and said it did not expect any improvement in 2020.
Housebuilder Persimmon has also fallen. After posting flat profits, the company said it was not going to step up its capital return plan. In addition, David Jenkinson, the group’s chief executive, is stepping down from the role.
Standard Chartered has also tumbled after the Asia-focused bank said that a key earnings target would take longer to meet because of slower global economic growth, a softer Hong Kong economy and the impact of the coronavirus outbreak.
Bayer Group AG shares have also come under pressure. The company acknowledged for the first time in its annual report that lawsuits related the controversial weed killer Roundup may force it to sell assets, issue new equity or borrow money at unfavorable terms.
On the other hand, Reckitt Benckiser shares have moved to the upside. The consumer goods giant swung to net loss for 2019, but revenue for the year rose 2 percent from last year.
Natural gas and electricity supplier Engie has also surged after it set a slightly higher than expected core profit goal for this year.
British American Tobacco has also advanced as it reported a rise in 2019 pretax profit on higher revenue.
Asia
Asian stocks finished broadly lower on Thursday as investors fretted about the coronavirus outbreak turning into a worldwide pandemic. The further spread of the coronavirus outside China raised concerns about the impact of supply and demand disruptions.
Chinese stocks bucked the weak regional trend to end a tad higher as the country reported fewer deaths due to the coronavirus and the People’s Bank of China said that it would ensure ample liquidity through targeted reserve requirement ratio cuts in appropriate time to help achieve economic goals for this year.
The benchmark Shanghai Composite Index inched up 3.40 points, or 0.1 percent, to 2,991.33, while Hong Kong’s Hang Seng Index rose 82.13 points, or 0.3 percent, to 26,778.62.
Japanese shares ended lower for a fourth straight session as the safe-haven yen strengthened amid worries about the rapid spread of the coronavirus infections in the United States and elsewhere.
The Nikkei 225 Index plunged 477.96 points, or 2.1 percent, to 21,948.23, closing below 22,000 for the first time since October. The broader Topix closed 2.4 percent lower at 1,568.06.
Market heavyweight SoftBank tumbled 3.3 percent and Fast Retailing declined 2.4 percent. In the tech sector, Advantest dropped 2.6 percent and Tokyo Electron shed 2.2 percent.
Exporters finished broadly lower as the dollar fell against the yen. Both Sony and Panasonic plummeted around 4 percent. In the oil sector, Inpex and Japan Petroleum gave up 3-4 percent.
Australian markets fell for a fifth day on mounting worries about the global economic impact of a rapidly spreading coronavirus.
The benchmark S&P/ASX 200 Index gave up early gains to end the session down 50.20 points, or 0.8 percent at 6,657.90. The broader All Ordinaries Index slid 53.30 points, or 0.8 percent, to 6,737.40.
The big four banks fell 1-2 percent. Bank of Queensland surged 4.4 percent after unveiling a five-year strategy and revising its guidance.
Energy stocks such as Beach Energy, Origin Energy, Oil Search, Santos and Woodside Petroleum lost 2-3 percent after oil prices hit their lowest in more than a year overnight on demand worries.
On the other hand, Lynas Corp. rallied 5 percent after it received a much-needed three-year extension to its license to operate in Malaysia.
Embattled Retail Food Group jumped 5.4 percent as it reported a profit for the first half, its first since 2017. Afterpay Touch Group, the buy now, pay later operator, rose 1.4 percent after declaring its first-half results.
On the data front, private capital spending in Australia was down a seasonally adjusted 2.8 percent sequentially in the fourth quarter of 2019, official data showed. That missed expectations for an increase of 0.5 percent following the 0.4 percent drop in the three months prior.
South Korea’s Kospi fell 21.88 points, or 1.1 percent, to 2,054.89 as the country reported another 334 new coronavirus cases, pushing its total to 1,595, the most in any country other than China.
The United States and South Korea postponed joint military drills today as the number of infections outside China, the source of the outbreak, surpassed those appearing in the country for the first time.
Commodities
Crude oil futures are slumping $1.80 to $46.93 a barrel after tumbling $1.17 to $48.73 a barrel on Wednesday. Meanwhile, after falling $6.90 to $1,643.10 an ounce in the previous session, gold futures are climbing $9.10 to $1,652.20 an ounce.
On the currency front, the U.S. dollar is trading at 109.89 yen compared to the 110.43 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0977 compared to yesterday’s $1.0881.
