Thursday's Stock Market Open: US Equities Drop As Death Toll From Coronavirus Climbs In China

U.S. stocks traded lower on Thursday on worries that the fast spreading Chinese coronavirus will disrupt global trade and travel.

The Dow Jones Industrial Average dropped 73.08 points to 28,661.37 while the S&P 500 slipped 13.12 points to 3,260.28 and the Nasdaq Composite Index slumped 39.7 points to 9,235.46.

Chinese authorities said the death toll from the coronavirus outbreak has reached 170, and has spread to every region in mainland China, including Tibet. As of Wednesday, there were 7,711 confirmed cases in the country.

China’s Ministry of Finance said it has issued $3.9 billion in subsidies for epidemic prevention and control.

Infections have now been reported for the first time in India and the Philippines.

The virus has led many foreign airlines to suspend or reduce flights to China, while several major global companies have curtailed their operations in the country.

U.S. President Donald Trump has appointed a task force to coordinate the U.S. response to the virus outbreak.

“If things go wrong, whether earnings disappoint or the coronavirus causes a short or a long-term problem for the economy, there is not a lot of buffer in asset prices to absorb that,” said Simon Doyle, head of fixed income and multi-asset at Schroders in Sydney. “Clearly there will be a growth shock as people stop traveling, but we don’t know exactly how that will play out. From a market perspective, the lack of a risk premium does make markets vulnerable if it’s worse than people hope it is.”

Meanwhile, the U.S. economy grew by 2.1% in the fourth quarter, as expected. For the full year, the economy grew 2.3%, its slowest pace in three years, below the 2.9% increase from 2018 and the 2.4% gain in 2017.

The U.S. economy has not expanded by 3% or more over a full calendar year since 2005.

For the full year, personal consumption expenditure rose by 2.6%, down from the 3% pace recorded in 2018.

The Bank of England has left interest rates unchanged at 0.75%, but the decision was not unanimous. The Bank also cut the U.K.’s economic growth forecast for 2020 GDP to 0.8% from 1.2%. Growth for 2021 was also revised downward, to 1.4% from 1.8%.

Microsoft Corp. (MSFT) and Tesla Inc. (TSLA) both posted quarterly earnings that beat expectations

Markets in mainland China remained closed for the lunar new year holiday, but Hong Kong‘s Hang Seng index plunged 2.62% and Japan’s Nikkei-225 dropped 1.72%.

In Europe markets finished lower, as Britain’s FTSE-100 fell 1.36%, France’s CAC-40 tumbled 1.40% and Germany’s DAX dropped 1.41%.

Crude oil futures dropped 2.08% at $52.22 per barrel and Brent crude fell 2.55% at $57.41. Gold futures rose 0.57%.

The euro rose 0.19% at $1.1033 while the pound sterling gained 0.63% at $1.3103.