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US close: Dow Jones puts on worst performance in four months

By Iain Gilbert

Date: Monday 27 Jan 2020

US close: Dow Jones puts on worst performance in four months

(Sharecast News) - US stocks closed sharply lower on Monday as confirmed worldwide cases of the Wuhan coronavirus hit 2,862 and were continuing to rise.
At the close, the Dow Jones Industrial Average and S&P 500 were both down 1.57% at 28,535.80 and 3,243.63, respectively, while the Nasdaq Composite saw out the session 1.89% softer at 9,139.31.

The Dow recorded its worst day in four months and closed 454.68 points lower on Monday after rounding out the last week in the red as a result of the World Health Organization branding the virus an "emergency in China" albeit not yet globally.

However, since then, the death toll in China had risen to 81, with the WHO's director-general reportedly en route to the source in order to meet with local government and health officials.

SpreadEx's Connor Campbell said: "The rebounding confidence seen last Friday was long gone this Monday, the markets seriously struggling as fears surrounding the coronavirus outbreak intensified.

"On the surface it looked like the Dow Jones managed to avoid the kind of losses seen in Europe, instead falling a comparatively tame 1.4%. However, that 400-point plunge comes following the Dow's late dive last Friday, after the European indices had locked up shop for the weekend."

Iron ore and copper prices also tumbled amid fears of the potential hit to Chinese demand as a result of the outbreak - dragging mining stocks down in the process.

Shares of Expedia, Carnival, American Airlines and Delta all dropped more than 4% as concerns regarding the travel industry ran rife, while stock in trade bellwether Caterpillar was down 2.8%.

Also in the corporate space, Boeing shares were lower at the close after news broke that one of its aircraft had crashed over Afghanistan, although later reports indicated that it was in fact a US military Embraer jet.

On the earnings front, DR Horton shares were up 3.13%, while Whirlpool was down 1.44% after both firms released their latest quarterly figures.

In parallel, the yield on the benchmark 10-year US Treasury note was down by six basis points to 1.62% as some investors headed for the sidelines.

On the macro front, sales of newly built homes fell 0.4% across the US in December, with buyers somewhat taking their foot off the gas after low mortgage rates drove gains throughout much of 2019.

New single-family houses sold at a seasonally adjusted annual rate of 694,000 last month, according to the Commerce Department. But for the year as a whole, sales climbed 10.3% to 681,000 - the highest total since 2007 when the housing bubble was just starting to deflate ahead of the recession.

Elsewhere, the Dallas Fed Manufacturing Index increased to -0.20 points in January from -3.20 points in December of 2019.

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