Friday's Stock Market Open: US Equities Open Higher As China Tries To Halt Virus Spread

U.S. stocks turned lower on Friday as the U.S. reported a second case of coronavirus. On Thursday the World Health Organization said the deadly coronavirus outbreak in China was not yet a global health emergency. Chinese authorities have locked down several cities in the most infected part of the country.

The Dow Jones Industrial Average dropped 105.09 points to 29,055.00 while the S&P 500 slipped 18.7 points to 3,306.84 and the Nasdaq Composite Index dropped 34.9 points to 9,367.58.

China’s National Health Commission reported that at least 26 people have died from the coronavirus and at least 830 have become infected. China’s Finance Ministry has allocated 1 billion yuan ($145 million) to help Hubei province, the epicenter of the virus, to help contain the outbreak. As of Friday, at least 10 Chinese cities with about 33 million population were placed under lockdown.

The World Health Organization on Thursday called the outbreak an “emergency in China,” but did not characterize it as a global health emergency.

Still, some analysts worry it could get worse. “Make no mistake, this is, though, an emergency in China. But it has not yet become a global health emergency. It may yet become one,” said Tedros Adhanom Ghebreyesus, director-general of WHO.“

“Drastic steps, such as city-wide quarantine measures, can be a double-edged sword when it comes to market impact,” said ING’s senior rates strategist Antoine Bouvet. “On the one hand they signal the authorities are taking the problem seriously and help containment, on the other hand, they help paint a dramatic picture to investors unfamiliar with dealing with this sort of risk.”

The German economy received some good news. IHS Markit's flash composite Purchasing Managers' Index, which tracks the manufacturing and services sectors, rose to 51.1 in January from 50.2 in the prior month.

"The storm clouds over the German economy may be starting to clear", said IHS Markit economist Phil Smith. "Demand has started to firm up a little both at home and abroad, which is reflected in a first rise in new business for seven months.”

IHS Markit said on Friday that its composite purchasing managers index for the U.S. reached a ten-month high of 53.1 in January, from 52.7 in December. A reading above 50 points to growth in business activity.

The European Union and a group of 16 nations including China and Brazil will forming an alliance to settle trade disputes using an appeals and arbitration system at the World Trade Organization.

American Express (AXP) reported better-than-expected fourth quarter earnings.

Markets in mainland China were closed for the lunar new year holiday. Hong Kong’s Hang Seng gained 0.15% in a shortened trading session, and Japan’s Nikkei-225 rose 0.13%.

In Europe markets traded higher, as Britain’s FTSE-100 climbed 1.04%, France’s CAC-40 rose 0.88% and Germany’s DAX jumped 1.41%.

Crude oil futures dropped 2.63% at $54.13 per barrel and Brent crude fell 2.42% at $60.54. Gold futures gained 0.42%.

The euro slipped 0.26% at $1.025 while the pound sterling fell 0.37% at $1.3075.