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Wall Street drops on virus outbreak, U.S. data

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Wall Street’s major averages tumbled more than 1% amid the coronavirus outbreak, sluggish U.S. data and mixed corporate results

Wall Street’s major averages tumbled more than 1% on Friday as the coronavirus outbreak, sluggish U.S. data and mixed corporate results raised concerns over global growth.

The S&P 500 is down nearly 3% from its closing high hit earlier in January, as businesses struggle with supply problems due to the virus outbreak in China.

The World Health Organization has declared a global emergency as the virus endemic has attained alarming proportions with 213 deaths so far.

The Centers for Disease Control and Prevention (CDC) said it had issued a quarantine order for all repatriated individuals from China in California.

Delta Air Lines Inc. lost 2.38% and American Airlines Group Inc. fell 3.50% after the companies said they would suspend all flights to mainland China.

Economists fear a far greater impact of the coronavirus on the economy than SARS which killed around 800 people in 2002-2003 which cost around $33 billion to the global economy since China’s share of the world economy is now far greater.

Adding to the growth concerns was U.S. data showing consumer spending rose steadily in December, but wage gains indicated moderate growth in consumption and business investment contracted, putting the economy on a slower pace this year. Additionally, a report on manufacturing in the Midwest hit a four-year low for January.

We wouldn’t think this would be terribly prolonged but certainly it matters today and the data outside of Amazon has been certainly on the soft side, said Scott Ladner, chief investment officer at Horizon Investments in Charlotte.

Ladner said, so we don’t have the buttress of super strong data to kind of turn the narrative away from the obvious uncertainty that is out there with this virus. Inc. was the only positive, which helped the consumer discretionary index rise 1.39%. It surged 8.39% on better-than-expected results for the holiday-quarter that pushed it back into the $1 trillion market capitalization club.

Energy was by far the worst performer, tumbling 3.25%.

Oil majors Exxon Mobil Corp and Chevron Corp led the fall in the oil sector, with each dropping more than 4% after disappointing results.

The Dow Jones Industrial Average fell 525.63 points, or 1.82%, to 28,333.81, the S&P 500 lost 48.35 points, or 1.47%, to 3,235.31 and the Nasdaq Composite dropped 110.89 points, or 1.19%, to 9,188.05.

Both the Dow and S&P 500 were on pace for their worst weekly performance since early August.

Visa Inc. fell 3.70% after its quarterly revenue missed estimates and the payments network warned of incentives hitting 2020 results.

International Business Machines Corp gained 4.74% after it named a new chief executive officer.

Declining issues outnumbered advancing ones on the NYSE by a 3.22-to-1 ratio; on Nasdaq, a 3.44-to-1 ratio favoured decliners.

The S&P 500 posted 33 new 52-week highs and 12 new lows; the Nasdaq Composite recorded 48 new highs and 107 new lows.

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