S&P 500 falls after second US coronavirus case is confirmed, airline shares dip

The S&P 500 turned negative on Friday, giving back its gains from earlier in the day after the second U.S. case of the deadly coronavirus was confirmed. 

The broad index was down 0.1% after gaining as much as 0.25% to start off the session. The Dow Jones Industrial Average and Nasdaq Composite also traded well off their highs. The 30-stock Dow was up just 28 points, or 0.1%. The Nasdaq also traded 0.1% higher. 

On Friday, the Centers for Disease Control and Prevention said a Chicago resident who traveled to Wuhan — the Chinese city where the coronavirus originated — in December was diagnosed with the sickness. 

Shares of United Airlines and American both fell more than 3%. Las Vegas Sands and Wynn Resorts also dropped more than 2% each. Treasury yields fell, pushing back shares lower. The benchmark 10-year yield traded below 1.7%. JPMorgan Chase, Citigroup and Bank of America all traded more than 1% lower. 

Stocks stared the session on a strong note after the release of better-than-expected earnings from American Express and Intel.

American Express reported a quarterly profit and revenue that beat analyst expectations. Those results were driven in part by strong card fee revenues. The stock gained more than 3%.

Intel, meanwhile, climbed more than 8% after its fourth-quarter numbers topped estimates. The company also gave an optimistic outlook for the first quarter of 2020.

Those results add to what has been a solid start to the earnings season. More than 16% of the S&P 500 has released quarterly results thus far. Of those companies, about 70% have reported better-than-expected earnings, FactSet data shows.

Traders work on the floor of the New York Stock Exchange (NYSE) on January 21, 2020 in New York City.

Spencer Platt | Getty Images

Nick Raich, CEO of The Earnings Scout, pointed out that S&P 500 earnings expectations are also improving, which is “a reason why stocks continue to rise. The rise in price has been more than the underlying improvement in overall EPS expectations. This is what has made stock prices expensive in our opinion.”

Stocks have been on a record-setting tear since last year, with the S&P 500 rising more than 28% in 2019 and gaining more than 2% to start off 2020.

U.S. equities followed their European counterparts higher after IHS Markit data showed business activity in the region showed signs of stabilizing after weakening throughout 2019.

The Stoxx 600 index, which tracks a broad swath of European shares, advanced 1.1%. Germany’s Dax climbed 1.5% while the French CAC 40 gained 1.1%.

“Global economic activity is slowly firming, but is not likely to be sufficiently strong as to unnerve government bond markets over the next few months,” strategists at MRB Partners said in a note. “Nevertheless, the macro backdrop is sufficiently positive, and likely to remain so, to suggest that no worse than a digestion phase or mild correction will be necessary to better align equity prices with the slow-moving uptrend in earnings.”

Stocks have been subdued this week by fears of the China coronavirus spreading, with the death toll rising to 26 and the number of confirmed cases increasing to 830. The S&P 500 and Dow entered Friday’s session on pace for their first weekly loss of the year while the Nasdaq Composite was barely higher week to date.

The virus originated in China, but cases have also been reported in the U.S., Japan, and South Korea. The World Health Organization on Thursday called the outbreak an “emergency in China,” but stopped short of saying it constituted a global public health emergency. This led to a sigh of relief for investors, who were worried the situation had escalated to a global health emergency.

—CNBC’s Ryan Browne contributed to this report.

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