U.S. stock futures on Thursday morning pointed to significant declines at Thursday’s open even after President Donald Trump tried to assuage concerns over the coronavirus outbreak.
Futures slipped after the CDC confirmed the first U.S. coronavirus case of unknown origin in Northern California, indicating possible “community spread” of the disease. The CDC doesn’t know exactly how the patient, a California resident, contracted the virus.
Trump said in a news conference the risk of coronavirus to people in the U.S. is still “very low.” He added the U.S. is going to “spend whatever’s appropriate” to deal with the virus. Trump also put Vice President Mike Pence in charge of the U.S. response to the coronavirus.
The president said stocks should recover from their recent swoon. But as Trump spoke, the news about the “community spread” coronavirus case added to concerns that the coronavirus is spreading at a rapid pace, hitting stock futures.
Worries over how the coronavirus will impact corporate profits and global economic growth have roiled the U.S. stock market this week as the number of confirmed cases increases. South Korea has confirmed a total of more than 1,200 cases. About 400 people have contracted the virus in Italy.
Microsoft warned it will not meet its revenue guidance for a key segment. In a statement its supply chain is “returning to normal operations at a slower pace than anticipated,” which led the tech giant to cut its forecast for its personal computing division. Personal computing accounted for 36% of Microsoft’s overall revenue during the previous quarter. Microsoft shares were down 1.3% in extended trading.
Trump’s comments and Microsoft’s warning came after the Dow fell more than 100 points on Wednesday, adding to its massive decline for this week. Through Wednesday’s close, the Dow has lost more than 2,000 points this week. The 30-stock average is also on pace for its worst percentage-point weekly performance since 2008, down 7% over that time.
The Dow has also fallen more than 8% from its record high set earlier this month.
“As this week’s selling has progressed, we have seen some evidence of increased caution on the part of investors,” said Willie Delwiche, investment strategist at Baird. “Investors are shifting away from excessive optimism but there is still little evidence of fear overwhelming complacency. Bottoms are typically processes punctuated by climactic events and seeing breadth indicators stabilize would be an encouraging sign that such a process is underway.”
Bond prices, in turn, have surged this week.
The benchmark 10-year Treasury yield fell to 1.3% on Wednesday, a record low. The 30-year bond rate is also trading at an all-time low. Yields move inversely to prices.
“We’ve hit a pocket of fear,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “This is a big deal â¦ If this flows into the U.S., we could be in trouble because, let’s face it, the U.S. consumer is what’s holding this thing together.”
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