Confirming that coronavirus outbreak is the issue investors are most concerned about, a solid February jobs report was mostly glossed over Friday as markets continued careening lower on fears that the outbreak will sap the U.S. economy for much of this year.
- The S&P 500 tumbled 1.70%
- The Dow Jones Industrial Average lost 0.97%
- The Nasdaq Composite plunged 1.87%
- JPMorgan Chase (NYSE:JPM) was the worst-performing name in the Dow today after reports broke late Thursday that CEO Jamie Dimon had been rushed to a New York hospital for emergency heart surgery.
Before the market opened, the Labor Department said the U.S. economy added 273,000 new jobs last month, well ahead of the 175,000 expected, while the unemployment rate dipped to 3.5%. Average hourly earnings increased 0.3% and the January jobs number was revised higher in dramatic fashion from 273,000 to 175,000.
That’s all good news, but the reason for the lack of reaction is clear. January and the bulk of February were the last time frames where the coronavirus wasn’t a major issue in the U.S.
Now it is. Earlier today, the Centers for Disease Control and Prevention (CDC) said the number of confirmed cases in the U.S. is now of 230. Confirming that the virus is already taking a toll on various parts of the world’s largest economy, the White House is reportedly considering target stimulus to shore up specific industries hammered by the outbreak.
That brings us to another dismal day in which just two of the 30 Dow stocks were higher in late trading.
Hard to Keep Track
Nearly 10 Dow stocks were sporting losses of almost 4% or more in late trading today. While JPMorgan was the worst offender, plenty of other big names were getting in on the ominous act.
Microsoft (NASDAQ:MSFT) was next up. With Friday’s slide, the stock has shed about 13% just this month and again, it’s easy to spot why: the company confirmed two of its workers have the coronavirus. Some Microsoft workers are now working from home and the company is pledging to pay staffers full wages regardless of how many hours they work during the virus outbreak.
Nike (NYSE:NKE) was in the 4% or more loss club with Microsoft, meaning shares of the athletic apparel giant are lower by 13% this month. Yes, Nike makes an obvious victim at the hands of something like a global health epidemic, but remember, this is an old company that has weathered storms like this in the past and emerged stronger.
American Express (NYSE:AXP) and Disney (NYSE:DIS) can be seen as two of the bigger Dow disappointments today because the White House is considering plans to help the travel and leisure industry in the wake of the coronavirus. While specific details haven’t emerged yet, those should have been headlines to help battered AXP and DIS.
Oil Woes Continue
Discussions by the Organization of Petroleum Exporting Countries (OPEC) and other major oil producing nations, including Russia, fell apart, sending crude to its worst intraday loss in five years. Not surprisingly, Exxon Mobil (NYSE:XOM) was the second-worst Dow stock today and Chevron (NYSE:CVX) was lower by more than 3%. Simply put, it’s getting harder to call a bottom in the energy sector and that’s say something because the sector has been torched this year.
Apple: Now It’s About Demand
Apple (NASDAQ:AAPL) has had to deal with the coronavirus issue on multiple fronts. First, it was the breakout forcing closures of Apple supplier factories throughout China. Now, it’s questions about demand going forward.
Although Apple stock slipped nearly 3% today, some analysts believe that while iPhone demand could languish in the first half of the year, that could turn into a positive later in the year when the company releases its 5G iPhones.
Bottom Line on the Dow Jones Today
For good measure, it’s likely that the S&P 500 will report a year-over-year declines in first-quarter earnings, according to John Butters of FactSet Research.
“Over the past week, the aggregate earnings growth rate for Q1 2020 changed from slight year-over-year earnings growth on February 28 (+0.5%) to a slight year-over-year earnings decline today (-0.1%),” said Butters in a note published earlier today.
It’d be nice to get some good news for a change.
As of this writing, Todd Shriber did not own any of the aforementioned securities. He has been an InvestorPlace contributor since 2014.