Friday's Stock Market Close: US Equities Drop As Virus Fears Overcome Good Jobs Report

U.S. stocks ended a torrid four-day rally on Friday as growing fears of the economic impact of the coronavirus outbreak overcame a stronger-than-expected January jobs report.

The Dow Jones Industrial Average dropped 276.94 points to 29,102.83 while the S&P 500 slipped 18.09 points to 3,327.69 and the Nasdaq Composite Index fell 51.64 points to 9,520.51. For the week, the Dow gained 2.9%.

Volume on the New York Stock Exchange totaled 3.08 billion shares with 1,064 issues advancing, 237 setting new highs, and 1,869 declining, with 64 setting new lows.

Active movers were Uber Technologies Inc. (UBER), Nokia Corp. (NOK) and Ford Motor (F).

The U.S. Labor Department said on Friday the U.S. added 225,000 nonfarm jobs in January (well above economists’ estimates of about 158,000). The unemployment rate edged up to 3.6% from 3.5% as the labor force participation rate inched up 0.2% to 63.4%.

Average hourly earnings rose by 3.1% year-over-year ago to $28.44, marking 18 straight months of wage gains above 3%.

However, worries continued over the economic impact of the coronavirus plague. China’s National Health Commission confirmed 31,131 cases of the virus in the country, with 636 deaths.

The Federal Reserve warned Friday that the coronavirus outbreak posed a “new risk” to the economic outlook for the U.S.

“Because of the size of the Chinese economy, significant distress in China could spill over to U.S. and global markets through a retrenchment of risk appetite, U.S. dollar appreciation, and declines in trade and commodity prices,” the Fed wrote in its semiannual report to Congress. “The effects of the coronavirus in China have presented a new risk to the outlook.”

“China is really slowing and that’s worrying people for sure,” said Ed Hyman, chairman of Evercore ISI. “People are not going out. They are not shopping, and that’s what’s hurting particularly China.” Hyman added he sees zero growth for the Chinese economy this quarter.

And it appeared the U.S. stock market now reflected pessimism over China.

“The market moved up so quickly over the last few days and I think papered over the continued risk associated with the coronavirus,” said Robin Anderson, senior global economist at Principal Global Investors. “There’s still a lot of unknowns out there.”

As for the jobs report, Jason Thomas, chief economist at AssetMark said it had no monetary policy implications. “We’re generating enough jobs to keep consumer confidence high and enough wage growth to bring in people from the sidelines,” he said.

Overnight in Asia, markets finished mixed. China’s Shanghai Composite gained 0.33%, while Hong Kong’s Hang Seng slipped 0.33%, and Japan’s Nikkei-225 edged down 0.19%.

In Europe markets finished lower, as Britain’s FTSE-100 fell 0.51%, France’s CAC-40 slipped 0.14% and Germany’s DAX slumped 0.45%.

Crude oil futures dropped 1.06% at $50.41 per barrel and Brent crude edged up 0.09% at $54.52. Gold futures climbed 0.29%.

The euro dipped 0.32% at $1.0947 while the pound sterling fell 0.34% at $1.2884.

The yield on the 10-year Treasury plunged 4.01% to 1.578% while yield on the 30-year Treasury dropped 3.41% to 2.042%.