Dow rebounds after biggest one-day loss since October

  • Written by MarketWatch
  • Published in Economics

U.S stocks recovered some ground Tuesday, a day after worries about the impact of China’s coronavirus outbreak on global economic growth sparked the biggest one-day selloff since early October.

Investors were also wading through a tide of quarterly results from a number of high-profile companies as earnings reporting season picks up steam.

What are major indexes doing?

At midsession the Dow Jones Industrial Average DJIA, +0.74%[1]  gained 216 points, or 0.8%, to 28,752 while the S&P 500 index SPX, +0.98%[2]  was up 33 points, or 1%, to 3,277. The Nasdaq-100 COMP, +1.33%[3]   rose 122 points or 1.3%, to 9,262.

The Dow dropped 453.93 points Tuesday, a decline of 1.6%, to end at 28,535.80, while the S&P 500 shed 51.84 points, or 1.6%, to end at 3,243.63. It was the biggest decline for both indexes since Oct. 2. The Nasdaq Composite ended at 9,139.31, down 175.60 points or 1.9% — its biggest-one day fall since Aug. 23.

What’s driving the market?

Chinese authorities on Tuesday said deaths from the coronavirus epidemic rose to at least 106, while the number of confirmed cases in China rose to more than 4,500.

China’s already weakening economy is set to take another hit with businesses across the country remaining shut for an extended public holiday and tourism grinding to a halt, as authorities struggle to contain the pneumonia-like coronavirus that has spread across the nation, the South China Morning Post reported. [4]

“While the coronavirus outbreak is an unexpected risk factor that could move the markets if the situation deteriorates, and comparisons to the 2003 outbreak of severe acute respiratory syndrome (SARS) have been widespread, there are important differences,” J.P. Morgan, chief of global research, Joyce Chang wrote in a note.

“First, the Chinese government has taken serious actions much faster this time. Second, the mortality rate of the current coronavirus outbreak is 2-3% compared to +10% for SARS, and the vast majority of current casualties have been concentrated in elderly people with pre-existing conditions,” Chang said.

See: Three reasons coronavirus won’t derail China’s economy[5]

Investors are also digesting U.S. corporate earnings reports Tuesday. Apple is among the S&P 500 index components set to report after Tuesday’s close. Apple suppliers cautioned [6]coronavirus could impact the phonemaker’s planned production hike.

“Companies are beating earnings estimates by 5% thus far, the best beat rate since 1Q19, a number in line with the post-crisis...

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