Friday's Stock Market: US Equities Plunge, Dow Down 380, On Coronavirus Fears

Update: 2 p.m. EST

The Dow Jones Industrial plunged more than 500 points in late afternoon trading on coronavirus fears as the three major U.S. airlines canceled all flights to mainland China.

At 1:58 p.m. EST, the Dow was off 544 points to 28,315. The Nasdaq was off 125 points to 9,173 and the S&P 500 was down 52 points to 3,231.

Original story

U.S. stocks tanked on Friday on spiraling fears over the global spread of coronavirus and its potential economic impact.

The Dow Jones Industrial Average dropped 379.8 points to 28,480.36 while the S&P 500 fell 36.59 points to 3,247.07 and the Nasdaq Composite Index tumbled 79.12 points to 9,219.81.

Delta and American Airlines have suspended all flights between China and the U.S.

China’s National Health Commission reported on Friday that 213 people have died from the coronavirus and 9,692 others have been infected. On Thursday, the World Health Organization declared the virus as a global health emergency.

The U.K. Department of Health and Social Care on Friday confirmed Britain’s first two cases of coronavirus.

Ilya Feygin, senior strategist at WallachBeth Capital, said “there’s fear going into the weekend. The theme coming into this year was the Fed and Trump are going to bail us out of any problems, but the virus is something neither one can do anything about. That’s a reason to become more fearful.”

Goldman Sachs said it expects the outbreak of China’s coronavirus to cut U.S. economic growth by 0.4% in the first quarter, followed by a rebound of 0.3%-0.4% in the second quarter.

“The drag on growth operates mostly through lower tourism from China and lower U.S. goods exports to China,” Goldman Sachs said.

“The outbreak of the coronavirus has added another headwind to the near-term outlook for stocks,” said Peter Berezin, chief global strategist at BCA Research, said in a note. “Viruses often become less lethal as they mutate because a virus that kills its host is also a virus that kills itself. Unfortunately, in a world of mass travel, a virus can spread across the globe before it has time to lose potency.”

Britain will formally leave the EU Friday night.

In the U.S., consumer spending increased 0.3% in December, while personal consumption expenditures, or PCE, inflation index rose 0.3% last month, the biggest such gain since last April. The yearly rate of inflation climbed to a one-year high of 1.6%. Core PCE, which excludes food and energy, rose 0.2% in December, while the yearly rate rose to 1.6% from 1.5%.

The employment cost index rose 0.7% in the fourth quarter, the Bureau of Labor Statistics said Friday. Wages and salaries climbed 2.9% in 2019, down from a 3.1% gain in 2018.

The Chicago Purchasing Managers Index fell to 42.9 this month from 48.9 in December. Any reading below 50 indicates deteriorating conditions.

In a bright spot, Amazon (AMZN) surged 9.42% after it posted superb earnings and revenue for the fourth quarter.

Markets in mainland China remained closed for the lunar new year holiday, but Hong Kong‘s Hang Seng index dropped 0.52% and Japan’s Nikkei-225 gained 0.99%.

In Europe markets finished lower, as Britain’s FTSE-100 fell 1.39%, France’s CAC-40 tumbled 1.06% and Germany’s DAX dropped 1.22%.

Crude oil futures dropped 0.13% at $52.07 per barrel and Brent crude slipped 0.44% at $57.08. Gold futures edged up 0.03%.

The euro rose 0.47% at $1.1084 while the pound sterling gained 0.75% at $1.3191.