Dow, S&P 500 pull back amid earnings deluge and China’s efforts to contain viral outbreak

Dow, S&P 500 pull back amid earnings deluge and China’s efforts to contain viral outbreak

U.S. jobless claims rise slightly; first coronavirus case reported in Singapore

U.S. stocks were trading lower Thursday morning as investors parsed earnings from a pair of Dow components, while eyeing China’s struggles to contain a potential viral outbreak.

What are the major indexes doing?

The Dow Jones Industrial Average DJIA, -0.59% fell 111 points, or 0.4%, at 29,077, the S&P 500 index SPX, -0.45% lost 9 points, or 0.3% to 3,312, while the Nasdaq Composite index COMP, -0.23% retreated 6 points, or 0.1%, at 9,377.

On Wednesday, the Dow slipped 9.77 points, or 0.03%, to 29,186.27, while the S&P 500 index closed up 0.96 points or 0.03% at 3,321.75. The Nasdaq Composite Index was up 12.96 points or 0.14% at 9,383.77.

What’s driving the market?

Reports on U.S. quarterly earnings poured in Thursday with investors eager to glean more news about the health of the domestic economy in the midst of a historic run-up in the stock market. Meanwhile, Wall Street was keeping one eye on an Asian flu that has gripped Chinese markets and threatens to hurt an already-sluggish economy, with a potential to harm global economic growth.

Worries about the coronavirus accelerated somewhat after Beijing locked down additional cities in an effort to contain the spread of the disease, which is being compared with a deadly outbreak of the severe acute respiratory syndrome epidemic in 2002-03 that killed about 800 people.

“Today’s weakness is about the uncertainty related to the coronavirus, which could impact global growth and trade,” Jeff Kravetz, regional investment director at U.S. Bank Private Wealth Management told MarketWatch, adding that Thursday’s pullback is “probably just a pause in a march higher for U.S. equities, as we’re seeing some encouraging tech earnings, which bodes well for capex spending.”

Singapore has confirmed a first case of the coronavirus that has led to the quarantine of the Chinese city of Wuhan, Channel News Asia reported on Thursday.

Reports on earnings from the likes of Dow components Procter & Gamble Co. PG, -1.05% and Travelers Cos. Inc. TRV, -5.05% were helping guide investor sentiment beyond the Asian influenza. Fellow Dow constituent Intel Corp. INTC, +0.78%, will report after the close of trade Thursday.

On the economic front, the number of Americans who applied for unemployment benefits in mid-January rose slightly, but layoffs remain near a 50-year low and there’s no sign of deterioration in the strongest U.S. labor market in decades. Initial jobless claims increased by 6,000 to 211,000 in the seven days ended Jan. 18, the government said Thursday.

Meanwhile, the European Central Bank concluded a monetary policy meeting on Thursday by holding interest rates steady.

Which stocks are in focus?

Shares of P&G were down 0.1% Thursday, after the consumer-products company reported a fiscal second-quarter profit that beat expectations but revenue that rose less than forecast.

Traveler’s stock, meanwhile, slumped 4.8%, after the insurer reported profit and revenue that topped expectations but net premiums written that came up a bit shy.

Shares of Comcast Corp. CMCSA, -2.96% fell 2.5% even after the media giant topped revenue and earnings estimates for the fourth quarter.

Shares of PayPal Holdings Inc. PYPL, +1.00% rose 1.5% after the company announced a partnership with China’s UnionPay International.

American Airlines Group Inc. AAL, -1.10% reported fourth-quarter profit and load factor that rose better than Wall Street had expected, while revenue met forecasts. The company’s stock fell 0.6% Thursday amid concerns over the impact of the coronavirus on travel demand.

JetBlue Airways Corp.’s JBLU, +3.36% stock rose 3.7% Thursday, after the airline topped earnings estimates for the fourth quarter.

Shares of Southwest Airlines Co. LUV, +1.22% rose 2.2% after the air carrier reported a fourth-quarter profit and load factor that missed expectations, while revenue rose a little above forecasts. Chief Executive Gary Kelly said operational performance in 2019 was reduced by an estimated $828 million due to the grounding of Boeing Co.’s BA, +1.96% 737 MAX planes.

Kimberly-Clark Corp. KMB, -0.20% reported fourth-quarter earnings and sales that slightly beat expectations Thursday morning, while raising its dividend. The consumer-products company’s stock rose 1.6%.

Freeport-McMoRan Inc. FCX, -8.20% reported fourth-quarter earnings that fell slightly less than expectations, while revenue grew more than forecasts. The copper-and-gold miner’s stock fell 7.5% Thursday.

Which stocks are in focus?

Government bond yields were retreating Thursday, with the yield on the 10-year U.S. Treasury TMUBMUSD10Y, -2.94% down 3.8 basis points, to 1.730%.

Oil prices were in retreat, with the price of a barrel of West Texas Intermediate crude for March delivery CLH20, -2.75% falling more than 3%, to $54.88. In precious metals, gold for February delivery GCG20, +0.39% was up 0.2% at $1559.50 an ounce.

The U.S. dollar rose 0.2% relative to a basket of six rivals, according to the ICE US Dollar index DXY, +0.26%

In Europe, stocks SXXP, -0.63% fell 0.6% amid conronavirus concerns and after the European central bank left key monetary policy unchanged, as expected.

In Asia overnight, stocks sold off sharply, with the China CSI 300 000300, -3.10% losing 3.1%, Hong Kong’s Hang Seng index HSI, -1.52% down 1.5% and Japan’s Nikkei 225 NIK, -0.98% losing 1%.

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