It was a brutal week on Wall Street as Coronavirus fears would not be shaken. Not surprisingly, Emerging Markets experienced the largest pullback. However, the Nasdaq Composite was not far behind in losses.
Despite the holiday shortened trading week for the U.S., news came out on Monday that Apple would be cutting its guidance for second quarter. Apple is the second largest holding in the S&P 500, with a weighting of around 4.7%. This was a clear sign that even domestic companies were preparing investors with the idea that growth would be slowing, at least temporarily, due to the supply chain issues overseas.
In 2017, 49% of China’s exports were technology related . Last month’s slowdown in manufacturing these exports has yet to be fully seen in the markets. But news surrounding tech companies’ primary maker of goods have been ominous. As a result, Technology had the greatest pullback at the sector level last week. In total, 10 of the 11 sectors reflected losses. Real Estate was the only grouping that managed to sit flat for the week.
As the virus continues its spread in countries other than China, Reuters reported that G20 leaders would monitor the impact of the outbreak on global growth and take necessary action if needed, including the further loosening of monetary policy.
Last week, the head of the IMF, Kristalina Georgieva, stated the that the current coronavirus outbreak is the “most pressing uncertainty” facing the global economy right now.
For Europe, Italy appears to be the epicenter of the outbreak as the number of inflected patients reported jumped from 3 to over 200 in just a couple days and 6 people have died in the country from the virus as of Monday. This has prompted authorities to lock down 12 towns in the country and close a number of tourist attractions.
But not all news was bad last week. Housing Starts beat expectations and Building Permits reached the highest level in 12 years. Finally, The Weekly Jobless Claims came in at expectations with a reading of 210,000. This shows that there still is a fair amount of positive economic news despite the lingering fears of a pandemic.
“Investor Update on Quarterly Guidance.” Apple Newsroom, 18 Feb. 2020, www.apple.com/newsroom/2020/02/investor-update-on-quarterly-guidance
Rashad, Marwa. “G20 Finance Heads Eye Impact of Coronavirus Outbreak on Growth, See Modest Pickup.” Reuters, Thomson Reuters, 23 Feb. 2020, www.reuters.com/article/us-g20-saudi-virus/g20-finance-heads-eye-impact-of-coronavirus-outbreak-on-growth-see-modest-pickup-idUSKCN20H0HX.
Feuer, William. “Coronavirus: IMF Chief Says the Outbreak Is the 'Most Pressing Uncertainty' for Global Economy.” CNBC, CNBC, 19 Feb. 2020, www.cnbc.com/2020/02/19/coronavirus-imf-chief-says-the-outbreak-could-derail-global-economic-growth.html.
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