Coronavirus fears continue to grip the market as cases in California, aggressive response measures in countries outside of the U.S. and China and more warnings from corporations keep investors on edge. While stocks and crude oil prices keeping sinking, bonds keep gaining amid the flight to safety driven by the continued advance of the outbreak.
ECONOMIC EVENTS: In the U.S., Q4 GDP growth was unrevised at the same 2.1% rate reported in the advance report. Durable goods orders declined 0.2% in January, which was not as bad a estimated. A pending home sales index climbed 5.2% to 108.8 in January, which was better than forecast. Initial jobless claims rose 8,000 to 219,000 in the week ended February 22.
The Centers for Disease Control and Prevention confirmed last night an infection with the coronavirus in California in a person who reportedly did not have relevant travel history or exposure to another known patient, stating it could possibly represent the first instance of community spread of Covid-19 seen in the U.S. During a press conference this afternoon, California Governor Gavin Newsom said 28 people in the state have tested positive for coronavirus and that about 8,400 people are being monitored because of their travel.
Outside of the U.S., Japan has asked all elementary and high schools in the country to close after this week and not reopen until after their spring break ends in April due to fears around the virus outbreak.
TOP NEWS: After Microsoft (MSFT) announced that it does not expect to meet its More Personal Computing segment guidance as the supply chain is returning to normal more slowly than expected given the Covid-19 outbreak, multiple Wall Street analysts said they believe underlying demand trends are intact and they view the bad news as temporary. Wedbush analyst Daniel Ives said that after Apple (AAPL) was the first of the tech bellwethers to confirm the damaged supply chain post the coronavirus outbreak last week, it "should not be a shocker to the Street" that Microsoft's PC business is going to be under near-term pressure.
Last night, Booking Holding (BKNG) reported "strong" Q4 results, but also cited a significant impact from the coronavirus on its forward outlook, stating that its wider than typical guidance ranges are due to "the high level of uncertainty in forecasting the coronavirus and its associated impact on the company and the travel industry generally."
In its own more optimistic coronavirus update, Starbucks (SBUX) said it is "seeing the early signs of a recovery" in China. In a letter to employees posted on its corporate blog, Starbucks CEO Kevin Johnson reported that the coffee giant now has 85% of stores open across China as it continues to assess the ongoing impact of the disease outbreak.
In other coronavirus news, several large companies are pulling out of in-person travel for various conferences and events amid fears of a further spread. Facebook (FB) announced that it has canceled the in-person component of its F8 developers conference this year, while Microsoft and "Fortnite" creator Epic Games both announced the withdrawal of their appearances at this year's Game Developers Conference. Both follow Facebook's Oculus and Sony (SNE), who said last week that they wouldn't attend GDC this year.
In earnings news, Best Buy (BBY) reported better than expected sales and earnings for the fourth quarter and raised its quarterly dividend by 10%.
Meanwhile, the Wall Street Journal reported that Boeing (BA) has agreed to cover payments for jet engines made for its grounded 737 Max, easing the burden of the production delay on suppliers General Electric (GE).
Additionally, Thyssenkrupp (TKAMY) announced that it has sold its Elevator Technology business to a consortium led by Advent, Cinven and RAG foundation for EUR17.2B.
MAJOR MOVERS: Among the noteworthy gainers were Vir Biotechnology (VIR) and Novavax (NVAX), which surged over 72% and 28%, respectively, as coronavirus fears mount. Both companies are working on coronavirus vaccines. Also higher were Etsy (ETSY) and Square (SQ), which gained a respective 14.3% and 3.5% after reporting quarterly results.
Among the notable losers was Virgin Galactic (SPCE), which slid 23.6% after analyst at Morgan Stanley and Credit Suisse both downgraded the shares. Also lower was Tesla (TSLA), which fell 12.8% after Bloomberg reported registrations of new Teslas in China plunged 46% last month as the coronavirus outbreak adds to a slump in the country's car market. Additionally, Nutanix (NTNX) and Anaplan (PLAN), fell 28.6% and 24.2%, respectively, after reporting quarterly results.
INDEXES: The Dow fell 1,190.95, or 4.42%, to 25,766.64, the Nasdaq lost 414.29, or 4.61%, to 8,566.48, and the S&P 500 declined 137.63, or 4.42%, to 2,978.76.
