Stocks end in negative territory amid continued China coronavirus fears
Stocks opened lower and showed no sign of recovery after China reported that a total of 1,900 new cases of the Wuhan coronavirus were diagnosed over the weekend. However, the Centers for Disease Control and Prevention said on a conference call this morning that there have been no new U.S. coronavirus cases confirmed other than the five already reported. Meanwhile, the U.S. upped its level of caution about travel to China, raising its warning level to "reconsider travel."
ECONOMIC EVENTS: In the U.S., new home sales dipped 0.4% in December to a 694,000 home pace. The Dallas Fed manufacturing index rose 3.0 points to a negative 0.2 reading in January.
TOP NEWS: Shares of Macau casino operators continued to slide as Bloomberg reported that the number of mainland Chinese visitors to Macau fell 80% on Sunday, the third day of the Lunar New Year holiday, when compared with the equivalent day during last year's holiday break. Additionally, Bank of America analyst Shaun Kelly downgraded Wynn Resorts (WYNN) to Neutral citing the recent spread of fears and headlines related to the Wuhan coronavirus.
Meanwhile, the U.S. Department of State updated its China travel advisory, saying that people should reconsider travel to China due to the risks associated with coronavirus.
In his own research note to investors, Oppenheimer analyst Rupesh Parikh downgraded Estee Lauder (EL) to Perform from Outperform and removed the stock as a Top Pick citing recent developments in China with the coronavirus, coupled with the premium valuation at which shares trade. Meanwhile, Credit Suisse analyst Michael Binetti noted that the retail stocks with significant China exposure such as Estee Lauder, Nike (NKE), and Tapestry (TPR) have started to underperform.
Among the restaurant stocks he covers, Guggenheim analyst Matthew DiFrisco pointed out that Starbucks (SBUX) has the greatest exposure to China as measured by percentage of worldwide system revenues and operating income, followed by McDonald's (MCD) and Domino's Pizza (DPZ). Also, Yum China (YUMC) has temporarily closed some of its KFC and Pizza Hut stores in Wuhan, China as a response to the coronavirus outbreak there, Reuters reported.
In addition to the continued weakness in casino stocks and certain retail stocks, other travel and leisure stocks also continue to be pressured by coronavirus fears, including United Airlines (UAL), Delta Air Lines (DAL), American Airlines (AAL), Royal Caribbean (RCL), Norwegian Cruise Line (NCLH) and Carnival (CCL).
Reuters reported that Ghazni city spokesman Arif Noori said that a Boeing (BA) passenger plane had crashed. However, multiple other media reports have disputed that a Boeing plane was involved in a crash in the country. A U.S. military official has said that the Air Force E-11A communications jet that crashed in eastern Afghanistan with "less than five" on board is a military version of the Bombardier (BDRBF) Global Express business plane, Fox News' Lucas Tomlinson has reported.
In other Boeing news, CNBC reported that the planemaker has secured over $12B in financing from more than a dozen banks as the company shores up its balance sheet as it works through its ongoing 737 MAX crisis.
MAJOR MOVERS: Among the noteworthy gainers was Meridian (VIVO), which rose 20.7% after it said its 1-Step RT-qPCR mix was used in diagnostics development for coronavirus. Also higher was Nevro (NVRO), which gained 6.9% after analysts at JMP Securities and Morgan Stanley increased their price targets on the shares following a medical meeting.
Among the noteworthy gainers was SolarEdge (SEDG), which slid 12.6% after Northland analyst Gus Richard downgraded the stock to Market Perform from Outperform. Also lower was Scorpio Bulkers (SALT), which fell 10.2% after reporting quarterly results.
INDEXES: The Dow fell 453.93, or 1.57%, to 28,535.80, the Nasdaq lost 175.60, or 1.89%, to 9,139.31, and the S&P 500 declined 51.84, or 1.57%, to 3,243.63.