Tuesday's Stock Market Close: Nasdaq Ekes Out Tiny Gain To Set New High, As Broader Market Drops

U.S. stocks finished mostly lower on Tuesday, although Nasdaq scored a tiny gain, good enough for the index to set new closing high.

The Dow Jones Industrial Average dropped 166.03 points to 29,232.05 while the S&P 500 fell 9.86 points to 3,370.30 and the Nasdaq Composite Index edge up 1.57 points to 9,732.74.

Volume on the New York Stock Exchange totaled 3.05 billion shares with 1,212 issues advancing, 235 setting new highs, and 1,728 declining, with 75 setting new lows.

Active movers were led by Virgin Galactic Holdings Inc. (SPCE), Advanced Micro Devices Inc. (AMD) and Ford Motor Co. (F).

The global death toll from the coronavirus was about 1,875 on Tuesday with the number of infections at nearly 73,000.

Apple Inc. (AAPL) shares fell 1.83% on Tuesday after it warned that its fiscal second quarter sales will fall short of forecasts, citing production slowdowns and weakened demand in China due to the coronavirus outbreak.

“While this is disappointing, by now we don’t believe it’s surprising, and we still expect the issues to be transitory,” said Chris Caso, an analyst at Raymond James. “We think almost all of the production and most of the demand is likely to be recaptured once Apple’s manufacturing partners are able to return to full production, and once retail facilities in China return to normal.”

HSBC Plc (HSBC) shares plunged 5.57% said it will cut about 35,000 jobs over the next three years in a “fundamental restructuring” after its profits plunged in 2019.

“Longer term, it is also possible that we may see revenue reductions from lower lending and transaction volumes, and further credit losses stemming from disruption to customer supply chains,” Noel Quinn, HSBC’s interim chief executive, said.

The ZEW Research Institute said on Tuesday that German investor confidence plunged to 8.7 in February from 26.7 in January.

“The feared negative effects of the coronavirus epidemic in China on world trade have been causing a considerable decline [in sentiment],” said ZEW President Achim Wambach. “Expectations regarding the development of the export-intensive sectors of the economy have dropped particularly sharply.”

The New York Fed said on Tuesday that its Empire State business conditions index rose 8.1 points to 12.9 in February -- the highest level since last May.

The National Association of Home Builders said its Housing Market Index dipped by 1 point to 74 in February.

"Steady job growth, rising wages and low interest rates are fueling housing demand in a market that lacks inventory, particularly at the entry-level,” said NAHB chief economist Robert Dietz. “At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation. And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect. Price growth in excess of income growth harms affordability.”

Market behavior suggested the Chinese coronavirus crisis must be accounted for.

“Today’s dosage of economic reality is coming as a wake-up call to global investors who continue to buy into the belief that Chinese authorities have the coronavirus under control,” said Erik Bregar, head of FX strategy at the Exchange Bank of Canada.

“Sentiment toward global risk turned sour [Tuesday],” said Dariusz Kowalczyk, an emerging-markets strategist at Credit Agricole. “We continue to believe that markets have not yet fully priced in the magnitude of the hit to China’s economy as a result of the [coronavirus] outbreak.”

Overnight in Asia, markets finished mostly lower. China’s Shanghai Composite edged up 0.05%, while Hong Kong’s Hang Seng fell 1.54%, and Japan’s Nikkei-225 dropped 1.4%.

In Europe markets finished lower, as Britain’s FTSE-100 dropped 0.63%, France’s CAC-40 fell 0.48% and Germany’s DAX slipped 0.75%.

Crude oil futures were flat at $52.05 per barrel and Brent crude dropped 0.14% at $57.67. Gold futures rose 1.24%.

The euro slipped 0.36% at $1.0796 while the pound sterling edged down 0.03% at $1.3001.

The yield on the 10-year Treasury dropped 2.02% to 1.556% while yield on the 30-year Treasury tumbled 1.81% to 2.006%.