NEW YORK (Reuters) - Wall Street's main indexes tumbled on Thursday, putting them more than 10% below record highs set earlier this month and indicating that they then entered an intraday correction, as the rapid spread of the coronavirus globally deepened worries about growth and corporate earnings.
The number of new infections in China was overtaken for the first time by fresh cases elsewhere on Wednesday, most notably in Italy and Iran, while the U.S. Centers for Disease Control and Prevention confirmed an infection in California in a person who reportedly did not have relevant travel history or exposure to another known patient. (N)
Investors piled into safe-haven assets, with the yield on the benchmark 10-year note reaching an all-time low for the third consecutive day, while the dollar fell on expectations that the Federal reserve would respond by lowering interest rates.
COMMENTS
MATTHEW KEATOR, MANAGING PARTNER AT WEALTH MANAGEMENT FIRM THE KEATOR GROUP, LENOX, MASSACHUSETTS
“Fear is a much stronger emotion than greed and with the uncertainty surrounding the lack of production and consumption, people are taking advantage of this uncertainty to take some profits off the table.”
“Nobody knows when it will be time to buy. From the perspective of portfolio managers, if people are underweighted it’s an opportunity to buy. There are opportunities in this market. It’s predicated on what your long term goals are and what your allocation is.”
“The difference (with the current correction) is you can’t point to a specific date. The difference here is the uncertainty about everything. There doesn’t seem to be much systematically that you can point to.“
WILLIE DELWICHE, INVESTMENT STRATEGIST, ROBERT W. BAIRD, MILWAUKEE
"It's the uncertainty with the virus, and not necessarily the number of cases but the dispersion of cases. It's not a China thing, it's becoming more global and what that means in terms the spread of the virus and also the economic impact."
"I think it's the cumulative effect of the virus, and also some of the technicals within the market itself - you're starting to see outflows and shifts in terms of investor behavior - and as optimism unwinds, it produces selling."
"The important thing to keep in mind is that so much of last year's rally in stocks was premised on the U.S. economy, global economy and corporate earnings improving dramatically. So it's not just going to weigh on results this year, but those were baked in, in terms of where stock prices were. What we have right now is a valuation inspired repricing."
"The consensus was, after flat earnings in 2019, you'd get double digit earnings growth in 2020. If that's now being brought back to zero, there is a repricing that has to go on. There's a lot of uncertainty right now about where that impact lands, in the same way, it's also possible that forecasts are overreacting to the downside. It's the movement in the expectations that is adding to gyrations in market."
MICHAEL O’ROURKE, CHIEF MARKET STRATEGIST, JONESTRADING, STAMFORD, CONNECTICUT
"It's a continued escalation. The virus is in 47 countries. The CDC said we had first case of unknown origin. That's obviously alarming. There was a negative preannouncement from Microsoft (NASDAQ:MSFT) ... It looks like it's going to lead to a larger slowdown in the global economy than the market was expecting."
"The President likes to do whatever he can to talk up the stock market. There's a concern he's not candid with news and information."
"I think we'll test the 3,000 (S&P 500) level as support. I'm not sure if that's where the move's going to stop or not."
CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, INDEPENDENT ADVISOR ALLIANCE, CHARLOTTE, NORTH CAROLINA
“There's the news overnight about the first case in the U.S. where we don't have a good read about where the case came from. It's the first time they've talked about community spread. That's one more sign of the concerns people have. It's a 'sell first, ask questions later' type of environment.”
“As far as the long-term impact on corporate earnings and the economy, we don't believe there will be a huge change in the paradigm. I don't think it ruins the year. But there will be a significant impact on the next quarter or two. If you believed in the thesis of this being a year of global growth, you'd have to delay that thesis by three to six months.”
“Things can change quickly, but our base case is that similar to 2018, we don't believe there will be a recession, we don't believe there will be a bear market.”