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Stocks claw back as WHO says coronavirus outbreak not 'global emergency'

Jonathan Garber

U.S. equity markets erased the bulk of their losses after the World Health Organization said the coronavirus outbreak that originated in Wuhan, China, is not yet a "global health emergency."

The S&P 500 and the Nasdaq Composite finished the session higher, while the Dow trailed mainly due to Travelers after the insurance company warned about growing lawsuits resulting in higher jury payments.

Still, it was a volatile session for much of the day after China announced it had locked down three cities to try and contain the coronavirus, which has killed 17 people and sickened more than 500.

Companies that make facemasks and protective gear including Lakeland Industries and Alpha Pro-Tech, rose as the crisis spreads.

Gilead Sciences said it was looking into the possibility that one of its experimental ebola drugs may have potential as a treatment. While its shares were little changed, other drugmakers rallied.

Earnings reports continued to roll out with mostly better-than-expected results. Through Wednesday, 58 S&P 500 companies had reported their quarterly results, with 67 percent exceeding estimates.


On Thursday, Southwest Airlines reported record fourth-quarter revenue despite the grounding of the 737 Max aircraft. Southwest has the most exposure to the aircraft of any U.S. carrier.

American Airlines said its fourth-quarter profit jumped 27 percent from a year ago to $414 million, or an adjusted $1.15 a share, topping estimates.

Meanwhile, JetBlue beat on both the top and bottom lines.

All three airlines were under pressure early amid coronavirus concerns before reversing into positive territory.

Elsewhere on the earnings front, Procter & Gamble revenue fell short of expectations as sales from its baby care unit fell by low single digits amid increased competition.

Comcast beat on earnings and revenue as the number of new high-speed Internet customers far exceeded expectations.

Tesla coverage was resumed at the Zurich-based investment bank UBS with a “sell” rating. Analysts said “shares are over-shooting right now,” though the firm raised its price target to $410 from $160.

Ford announced late Wednesday that it will take a $2.2 billion pre-tax hit in the fourth quarter because of contributions to employee pension plans.

Commodities were mixed, with West Texas Intermediate crude oil down 1.9 percent at $55.68 a barrel and gold up 0.4 percent near $1,562 an ounce.

U.S. Treasurys rallied, pushing the yield on the 10-year note down 3.2 basis points to 1.739 percent.

In Europe, Germany’s DAX and fell 0.9 percent and France’s CAC shed 0.7 percent after the European Central Bank kept rates unchanged and launched a strategic review of its policy. Britain's FTSE lost 0.9 percent.


Overnight, China’s Shanghai Composite was hit hard as authorities attempted to stop the spread of the coronavirus ahead of the Lunar New Year.

Elsewhere in Asia, Hong Kong’s Hang Seng and Japan’s Nikkei fell 1.5 percent and 1 percent, respectively.

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