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Shares Set for Largest Drop Since October on Virus: Markets Wrap

(Bloomberg) — The spread of a deadly respiratory virus rattled global markets, sending U.S. stocks lower and fueling demand for havens in government bonds and gold. Oil fell for a fourth day on concern the outbreak will dent economic growth.

The S&P 500 Index headed for its biggest drop since October amid reports that U.S. officials had confirmed two more cases of the illness, which originated in China and has also spread to several countries in Asia and to Europe. Benchmark Treasury yields fell to a three-month low, while the dollar advanced for a second day.

Investors are exercising caution with stocks close to all-time highs, cognizant of the chance the respiratory virus migrates across the world and develops into a more devastating pandemic like the SARS illness that emerged 17 years ago. Officials in China boosted travel restrictions to cover 40 million people to contain the virus’s spread.

“Investors can’t help but be unnerved by constant headlines of new cases all over the world,” said Alec Young, managing director of global markets research at FTSE Russell. “To make matters worse, the market will be closed when we get the next update on the virus’ spread over the weekend. As such, this is quickly turning into a sell first, ask questions later environment.”

In company news, United Airlines Holdings Inc. and American Airlines Group Inc. each slid more than 3% on concern the virus will limit demand for air travel and tourism. Financial shares also sank, with Citigroup Inc. down 2% as UBS warned the sector could be hurt by less credit-card spending and a decline in cross-border payments.

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Health shares were among the worst performers Friday on growing speculation that upcoming elections in the U.S. may prompt lawmakers to take action on the increasing cost of medicines in the U.S. Intel Corp. was a rare bright spot after giving a bullish revenue forecast.

Elsewhere, the pound slipped for a second day versus the dollar, giving back some of its rally from earlier in the week.

These are the main moves in markets:

Stocks

The S&P 500 Index fell 0.9% as of 3:14 p.m. New York time.The Stoxx Europe 600 Index added 0.9%.The MSCI AC Asia Pacific Index fell 0.1%.

Currencies

The Bloomberg Dollar Spot Index gained 0.1%.The British pound declined 0.3% to $1.3078.The euro fell 0.2% to $1.1029.The Japanese yen rose 0.2% to 109.24 per dollar.

Bonds

The yield on 10-year Treasuries fell five basis points 1.68%.Britain’s 10-year yield dipped three basis points to 0.56%.Germany’s 10-year yield fell three basis points to -0.34%.

Commodities

West Texas Intermediate crude declined 2.3% to $54.30 a barrel.Gold rose 0.6% to $1,572.36 an ounce.

–With assistance from Cecile Gutscher, Adam Haigh and Brian Chappatta.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Brendan Walsh in Austin at bwalsh8@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh, Randall Jensen

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