Wall Street’s major indices tumbled more than 1.5 per cent on Friday, sealing its worst week in six months, as the spreading coronavirus outbreak coupled with sluggish US economic data and a mixed batch of corporate earnings, fuelled concerns about global growth.
After suffering its biggest one-day percentage decline since October 2, the S&P 500 is down more than 3 per cent from its closing high hit earlier in January, as businesses struggle with supply problems from the coronavirus epidemic that has killed 213 people in China and been declared a global emergency.
The Center for Disease Control and Prevention (CDC) said it had issued a quarantine order for all Americans repatriated from China to an air base in California.
However, stocks pared losses late in the session as the agency director, Robert Redfield, said the risk to the US public is low.
Delta Air Lines lost 2.38 per cent and American Airlines fell 3.17 per cent after the companies said they would suspend all flights to mainland China.
Economists fear the coronavirus could have a bigger impact than Severe Acute Respiratory Syndrome (SARS), which killed about 800 people between 2002 and 2003 at an estimated cost of $US33 billion to the global economy, since China’s share of the world economy is now far greater.
US data showing consumer spending rose steadily in December while wage gains indicated moderate growth in consumption amid contracting business investment added to the growth concerns.
Additionally, a report on manufacturing in the Midwest hit a four-year low for January.
“We spent most of this week still with this kind of euphoric optimism about the US market, and today that finally began to fade… people are finally starting to get concerned,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
“(The virus is) going to take a toll on the global economy, and investors are just starting to realise that now here in the US”
Amazon.com was a bright spot, surging 7.38 per cent on better-than-expected results for the holiday-quarter that pushed it back into the $US1 trillion market capitalisation club.
Gains in Amazon helped the consumer discretionary index rise 0.82 per cent, the only sector on the plus side. Energy was by far the worst performer, tumbling 3.18 per cent.
Oil majors Exxon Mobil and Chevron were the primary drags on the sector as each dropped more than 4 per cent after disappointing results.
The Dow Jones Industrial Average fell 603.41 points, or 2.09 per cent, to 28,256.03, the S&P 500 lost 58.14 points, or 1.77 per cent, to 3,225.52 and the Nasdaq Composite dropped 148.00 points, or 1.59 per cent, to 9,150.94.
For the week, the Dow fell 2.5 per cent, the S&P lost 2.1 per cent and the Nasdaq declined 1.8 per cent.
Both the Dow and S&P 500 had their worst weekly performances since early August. For the month, the Dow lost 1 per cent, the S&P slipped 0.2 per cent and the Nasdaq rose 2 per cent.
Visa fell 4.44 per cent after its quarterly revenue missed estimates and the payments network warned of incentives hitting 2020 results.
International Business Machines gained 5.09 per cent after it named a new chief executive officer.
About 9.03 billion shares changed hands in US exchanges, compared with the 7.61 billion daily average over the last 20 sessions.