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Wall Street rally pauses amid China virus outbreak, growth fears

The S&P index recorded 66 new 52-week highs and no new lows, while the Nasdaq recorded 86 new highs and 15 new lows.

Reuters|
Last Updated: Jan 21, 2020, 09.51 PM IST
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AP
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US stock indexes slipped on Tuesday as worries about the fallout from a deadly virus outbreak in China and a gloomy growth outlook from the IMF paused a record-setting rally on Wall Street.

The developments soured the mood for U.S. investors returning from a long holiday weekend. Strong data, the signing of the Phase 1 U.S.-China trade deal and an upbeat start to fourth-quarter earnings season had sent the main indexes to fresh highs on Friday.

Chinese officials on Tuesday confirmed the new coronavirus outbreak took six lives and that it could spread between humans, stoking fears of a global pandemic and reviving memories of Severe Acute Respiratory Syndrome (SARS) — another coronavirus outbreak that killed nearly 800 people in 2002-03.

With the virus spreading just ahead of the Chinese New Year holidays, travel stocks including Delta Air Lines Inc, United Airlines Holdings Inc and American Airlines Group Inc fell between 1.5% and 2.6%.

Hotel and casino operators Las Vegas Sands Corp and Wynn Resorts Ltd, both of which have large operations in China, dropped about 5%.

Booking.com owner Booking Holdings and Tripadvisor both fell more than 2%.

"(The virus outbreak in China) seems to be the biggest negative," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

"But it's more of a global sentiment. We may see U.S. markets try to spit it out because it doesn't have that much of an impact on U.S. economy."

At 10:09 a.m. ET, the Dow Jones Industrial Average was down 0.15% at 29,302.69. The S&P 500 fell 0.23% to 3,322.12 and the Nasdaq Composite slipped 0.09% to 9,380.87.

Another cause for concern was the International Monetary Fund trimming its global growth forecasts for 2020 and 2021. IMF Managing Director Kristalina Georgieva said on Monday that while a slowdown in global growth appeared to have bottomed out, there was no rebound in sight.

Halliburton Co rose 2.2% after the oilfield service provider beat Wall Street estimates for quarterly adjusted earnings.

Morgan Stanley slid 2.8% after Citigroup downgraded the stock to "neutral", saying the shares were fairly valued.

Declining issues outnumbered advancers for a 1.72-to-1 ratio on the NYSE and a 1.37-to-1 ratio on the Nasdaq.

The S&P index recorded 66 new 52-week highs and no new lows, while the Nasdaq recorded 86 new highs and 15 new lows.

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