China virus, earnings drive Wall St lower

US stock indexes have fallen as mounting worries over a coronavirus outbreak in China, disappointing corporate earnings and weakness in financial stocks prompted investors to hit the brakes after a strong rally this year.

China put on lockdown two cities at the epicentre of the coronavirus outbreak that has killed 17 people and infected about 600 amid fears the transmission rate will accelerate as hundreds of millions of Chinese travel for the Lunar New Year holidays.

Casino and hotel operators including Wynn Resorts, Melco Resorts and Las Vegas Sands, which draw a large portion of their revenue from China, were down between 1.0 per cent and 4.2 per cent on Thursday.

Airline stocks were mostly weaker, with Southwest Airlines slipping 0.7 per cent after reporting a 21 per cent fall in fourth-quarter profit due to Boeing 737 MAX costs.

American Airlines fell 2.9 per cent despite reporting a better-than-expected profit.

Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York, said investors were worried about the coronavirus.

"There is some concern that this will turn from an epidemic to a pandemic," he said.

However, Pavlik added it was a reason for investors to take some profits in an "overbought" market.

Fears of the virus outbreak hitting the global economy have knocked world stock markets off record highs this week even as US earnings reports so far have mostly been in line with expectations.

However, earnings reports on Thursday were largely disappointing. Dragging the Dow lower, insurer Travelers Cos fell 4.5 per cent following results.

Financial stocks, down 1.1 per cent, were among the biggest decliners along with the energy and materials indexes.

At 9.57am local time, the Dow Jones Industrial Average fell 0.60 per cent to 29,010.30. The S&P 500 shed 0.45 per cent to 3306.82 and the Nasdaq Composite was down 0.30 per cent at 9355.31.

Chipmaker Texas Instruments fell 1.8 per cent despite forecasting first-quarter revenue above market expectations, but bullish brokerage actions on Micron Technology and Western Digital checked losses in the sector.

Apparel maker VF slumped about 8 per cent after cutting its full-year earnings forecasts on weak demand for its Timberland brand.

Declining issues outnumbered advancers for a 2.73-to-1 ratio on the NYSE and a 2.76-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and three new lows, while the Nasdaq recorded 29 new highs and 28 new lows.

Austrlaian Associated PressBack to Breaking News

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