US Stock Market Overview – Stocks Tumble on Coronavirus FearsManufacturing slumps
Stocks got hammered on Friday, as the risk-off mentality pummeled global equity markets. Fear of the coronavirus spread across the globe. With more than 9-thousand cases of the virus in China and more than 200-dead, there are fears that there will be a global economic slowdown. Recent travel to China has been cut off. Before the closing bell, the head of the Center for Disease Control told the American Public that there is very little risk to the American public.
Oil prices continued to move lower while gold prices rallied. Energy shares have been the worst-performing sector in the S&P 500 index declining more than 9% over the past 30-days. US yields continued to drop. The manufacturing sector in the US continues to slide according to a report from the ISM.
All sectors in the S&P 500 index were lower, led down by technology shares, Utilities were the best performing sector in the S&P 500 index. One stock that bucked the trend was Amazon. The company reported its earnings on Thursday after the closing bell. Amazon shares closed up approximately 7% but were up as much as 11% during the trading session. The company beat on the top and bottom line and guidance were much better than expected.
The VIX Surges
The VIX volatility index surged 22% to close at 19, the highest the implied volatility index has been since October. The VIX has been trading at subdued levels for the past 3-months, as the stock market has surged to all-time highs. For the week the VIX closed up 29% and is poised to hit target resistance near 25. A higher VIX level makes premiums for options higher, which generates additional volatility.
Manufacturing Activity Slows
Regional manufacturing activity in the Midwest dropped in January to the lowest level since December 2015. The Chicago Purchasing Managers Index fell to 42.9 this month from 48.9 in December. Economists expected a small dip to 48.5. All five of the major components declined, with orders backlogs and new orders leading the way.