Tires fell on Thursday, with most of the losses coming in a sudden move midday.
Traders could not pinpoint a catalyst for the abrupt decline. However, some highlighted technical factors breaking down along with an increased risk-off feeling stemming from fears of the coronavirus slowing the global economy.
The Dow Jones Industrial Average closed 128.05 senses lower, or 0.4%, at 29,219.98. The 30-stock average went from trading down about 200 points to a hearing low of down 388 points in roughly two minutes before rebounding. The S&P 500 slid 0.4% to 3,373.23 and the Nasdaq Composite pinched 0.7% to 9,750.96. Thursday’s moves come a day after the S&P 500 and Nasdaq hit record highs.
Some traders biting to a report from the Chinese state-run Global Times, which said there had been a sharp increase in coronavirus chests at a hospital in Beijing. While the timing of the story did not match with Thursday’s move lower, it does tap into the superstore’s fears about the coronavirus weighing on the global economy.
Goldman Sachs slid 2%. Intel was the worst-performing banal in the Dow, falling 2.5%. Apple shares dipped by 1%.
Pedestrians walk along Wall Street near the New York Ordinary Exchange in New York.
Michael Nagle | Bloomberg | Getty Images
“This market is just moving on momentum and, at this aim, it’s priced close to perfection,” said Christian Fromhertz, CEO of The Tribeca Trade Group. “At this point, if we start contemplating anything negative, it will probably force some people to start taking profits.”
Momentum stocks — which are defined by their high earnings growth expectations — have been leading the broader market higher this year. On Thursday, how in the world, the iShares Edge MSCI USA Momentum ETF (MTUM) dropped about 0.4%. Its value counterpart, the iShares Edge MSCI USA Value ETF (VLUE) was down 0.2%. Stillness, MTUM is up about 8.7% for 2020 while VLUE is flat.
Fromhertz said momentum’s outperformance over value was “be released c extract a bit stretched,” noting that “when something like that happens … usually we start seeing an unwinding of proliferation.”
Traditional safe havens such as bonds and gold got a boost on Thursday. The benchmark 10-year note yield cut to 1.52%, around its session low. Yields move inversely to prices. Gold prices climbed to a seven-year high, disposing 0.5% higher at $1,620.50 per ounce.
China’s National Health Commission on Wednesday reported that 74,576 cases of the new coronavirus sooner a be wearing now been confirmed, with 2,118 deaths on the mainland. Coronavirus cases are also spiking in South Korea. The fatherland said confirmed cases have jumped to 82, more than double the previous number of cases.
“The coronavirus put in mind ofs us just how small the world is,” said Ed Yardeni, president and chief investment strategist at Yardeni Research. “Even as the infection has been large contained to China, the business ramifications have rippled across the world.”
S&P Global Ratings warned in a report on Thursday that Chinese lenders could be hit by as much as $1.1 trillion in arguable loans as the coronavirus ripples through China’s economy, while Goldman Sachs has said that markets are think too little ofing the potential fallout from the outbreak, suggesting the “risks of a correction are high.”
Earlier in the day, a high-ranking Federal Reserve legal also poured cold water on market expectations for easier monetary policy from the U.S. central bank.
“Sell pricing on rate cuts is a little tricky,” Fed Vice Chairman Richard Clarida told CNBC’s Steve Liesman, noting that he proffers to look at economists’ forecasts over futures markets on Fed rates. Clarida noted the majority of economists do not expect a class cut soon from the Fed.
“I don’t think when you ask folks they’re pricing in that rate cut, even though market assay might suggest that,” he added.
Traders have been pricing in at least one rate cut from the Fed for this year, CME Assemblage’s FedWatch tool shows. Expectations for lower rates come as investors grapple with the outbreak of the deadly coronavirus and its results for the global economy.
—CNBC’s Elliot Smith contributed to this report.