Stocks Edge Higher With Virus Fallout in Focus: Markets Wrap

(Bloomberg) --

U.S. stocks eked out a small advance, dodging the losses that took hold in Europe and Asia, as investors evaluated the risk that a deadly respiratory virus spreading from China could curb global growth. Treasuries climbed and oil dropped.

Gains for big tech companies overshadowed losses for makers of consumer goods, providing just enough lift to send the Nasdaq Composite Index to a fresh record high. Other markets showed greater concern about the potential fallout, with oil sinking to its lowest level since November on speculation the virus could dent demand. Government bonds and the yen rallied as investors sought out havens.

Earlier, China’s Shanghai Composite Index plunged 2.8% on the last trading day before the Lunar New Year holiday, the biggest drop in eight months, as traders considered the virus’s potential impact on travel and shopping.

While corporate earnings have beaten analysts’ estimates this season amid signals that global growth is picking up, investors are cautious with stocks trading at lofty valuations. Fewer than 20 deaths have been tallied from the Chinese virus, and the World Health Organization opted against calling the outbreak a public health emergency of international concern. But traders are hesitant to take on risk on the chance the outbreak could develop into something like the much more devastating SARS respiratory illness that emerged in China 17 years ago.

“There is concern that this may become a much bigger event,” said Quincy Krosby, chief market strategist for Prudential Financial Inc. “The market is vulnerable to a pullback or a consolidation.”

Elsewhere, emerging-market stocks fell to a two-week low. Mining companies led the Stoxx Europe 600 Index lower. The euro weakened after policy makers held interest rates steady and European Central Bank President Christine Lagarde said officials will look into the potential side effects of negative interest rates.

Read more on the impact from the virus:

• Singapore Reports Virus Case as China Limits Some Travel
• Deadly Virus Turns Wuhan Into a No-Go Zone for Airlines
• Chinese Stocks Plunge in Worst End to Lunar Year on Record

Here are some events to watch out for this week:

• Companies including Intel Corp. and Procter & Gamble Co. will post results.
• Eurozone PMI data is due Friday.
• The World Economic Forum, the annual gathering of global leaders in politics, business and culture, continues in Davos, Switzerland.

These are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.1% at the close of trade in New York; the Nasdaq Composite added 0.2%.
• The Stoxx Europe 600 Index fell 0.7%.
• The MSCI Asia Pacific Index dipped 0.8%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%.
• The euro fell 0.3% to $1.1055.
• The British pound fell 0.2% to $1.3121.
• The Japanese yen gained 0.3% to 109.49 per dollar.

Bonds

• The yield on 10-year Treasuries dipped four basis points to 1.73%.
• Germany’s 10-year yield fell five basis points to -0.31%.
• Britain’s 10-year yield decreased five basis points to 0.59%.

Commodities

• West Texas Intermediate crude decreased 2% to $55.59 a barrel.
• Gold rose 0.3% to $1,562.72 an ounce.

--With assistance from Gregor Stuart Hunter, Adam Haigh, Todd White and David Wilson.

To contact the reporter on this story: Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editors responsible for this story: Sam Potter at spotter33@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

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