US: Coronavirus concerns drag down Wall St, but indexes eke out weekly gains

[NEW YORK] US stocks fell on Friday as fears of economic damage from the spread of the coronavirus intensified, though Wall Street's major indexes ended well above their session lows.

The S&P 500 posted its 10th decline in 12 sessions as moves to contain the virus crippled supply chains and prompted a sharp cut to global economic growth forecasts for 2020. Since its record closing high on Feb 19, the benchmark index has lost more than 12 per cent, wiping out US$3.43 trillion from its market capitalisation, according to S&P Dow Jones Indices.

Even so, for the week the S&P 500, along with the Dow Jones Industrial Average and the Nasdaq, posted a modest gain as stocks on Friday pared losses late in the session. Comments from Federal Reserve officials about the possibility of using other tools in addition to interest rate cuts to blunt the economic impact of the coronavirus helped stocks ease declines, said Alicia Levine, chief strategist at BNY Mellon Investment Management in New York.

Nonetheless, "it's very unclear what the economic impact will be," Ms Levine said.

Yields on long-dated US Treasuries fell to record lows as investors fled to bonds, whose prices move inversely to their yields. The drop in Treasury yields weighed heavily on shares of financial companies, which tumbled 3.3 per cent. The S&P 500 banks index dropped 4.7 per cent, bringing its total decline for the week to more than 8 per cent.

Shares of cruise operators Carnival Corp and Royal Caribbean Cruises slid after Reuters reported that the administration of President Donald Trump was considering ways to discourage US travellers from taking cruises. Carnival shares fell 2.6 per cent, and Royal Caribbean shares dropped 1.2 per cent.

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"The decline today is all about the efforts to contain the spread of the virus," said Emily Roland, co-chief investment strategist at John Hancock Investment Management in Boston. "The measures being taken could dampen commerce and consumer activity, and markets are responding to that."

Data showing a robust pace of hiring in February largely went ignored, given that the data captured little of the impact from the coronavirus. A sharp downturn in later economic and corporate earnings data would likely strike a further blow to US markets, analysts said.

The Dow Jones Industrial Average fell 256.5 points or 1.0 per cent to 25,864.78, the S&P 500 lost 51.57 points or 1.7 per cent to 2,972.37, and the Nasdaq Composite dropped 162.98 points or 1.9 per cent to 8,575.62.

For the week, the S&P 500 gained 0.6 per cent, the Dow added 1.8 per cent and the Nasdaq rose 0.1 per cent.

All 11 S&P sectors ended lower on the day Friday, led by a 5.6 per cent drop in energy stocks, which tracked a 10 per cent slump in US crude prices.

The Cboe Volatility Index, known as "Wall Street's fear gauge", hit its highest level since August 2015 during the session but pulled back as stocks pared losses. It ended 2.32 points higher at 41.94.

Starbucks Corp shares declined 1.1 per cent after the coffee chain said it expected its sales in China in the quarter ending in March to fall by 50 per cent in stores open for at least a year.

Costco Wholesale Corp shares fell 1.4 per cent as it said it was struggling to keep up with demand for essentials, including disinfectants.

Declining issues outnumbered advancing ones on the New York Stock Exchange by a 4.40-to-1 ratio; on Nasdaq, a 3.77-to-1 ratio favoured decliners.

The S&P 500 posted five new 52-week highs and 142 new lows; the Nasdaq Composite recorded 16 new highs and 542 new lows.

Volume on US exchanges was 14.20 billion shares, compared to the 10.54 billion average for the full session over the last 20 trading days.

REUTERS