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Concerns About Coronavirus Outbreak Lead To Weakness On Wall Street

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Following the holiday on Monday, stocks fluctuated over the course of the trading day on Tuesday before ending the session mostly lower. With the drop on the day, the major averages pulled back off the record closing highs set last Friday.

The major averages all finished the day in negative territory. The Dow slid 152.06 points or 0.5 percent to 29,196.04, the Nasdaq dipped 18.13 points or 0.2 percent to 9,370.81 and the S&P 500 fell 8.83 points or 0.3 percent to 3,320.79.

Stocks initially move to the downside amid concerns about the economic impact of a deadly coronavirus outbreak in China.

Chinese officials revealed the coronavirus outbreak has resulted in six deaths among nearly 300 confirmed cases, with the virus confirmed to be transmissible among humans.

The major averages staged a recovery attempt over the course of the morning before pulling back once again after the Centers for Disease Control and Prevention confirmed the first travel-related case of the coronavirus in the United States.

The CDC said the first case of coronavirus infection in the U.S. was diagnosed in the state of Washington in a patient who recently returned from Wuhan, China.

Adding to the negative sentiment, the International Monetary Fund downwardly revised its forecast for global economic outlook due to bigger than expected slowdowns in emerging markets like India.

The IMF said it now expects 3.3 percent global growth in 2020 compared to its previous estimate for 3.4 percent growth. The organization also lowered its 2021 growth forecast to 3.4 percent from 3.6 percent.

Selling pressure remained relatively subdued, however, with traders seemingly reluctant to miss out on any further upside.

A lack of major U.S. economic data may also have kept some traders on the sidelines following the long, holiday weekend.

The economic calendar remains relatively quiet throughout the week, which may lead to increased attention on the latest earnings news.

Sector News

Natural gas stocks moved sharply lower over the course of the session, dragging the NYSE Arca Natural Gas Index down by 3.9 percent to its lowest closing level in over a month.

The sell-off by natural gas stocks came amid a steep drop by the price of the commodity, with natural gas for February delivery plummeting $0.108 or 5.4 percent to $1.895 per million BTUs.

Substantial weakness also emerged among oil service stocks, as reflected by the 3 percent nosedive by the Philadelphia Oil Service Index.

Steel stocks also saw significant weakness amid concerns about the outlook for demand, with the NYSE Arca Steel Index tumbled by 2.6 percent.

Transportation, tobacco and biotechnology stocks also saw notable weakness on the day, while gold and housing stocks showed strong moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slumped by 0.9 percent, while Hong Kong's Hang Seng plummeted by 2.8 percent.

European stocks also ended the day mostly lower, although the German DAX Index bucked the downtrend and inched up by 0.1 percent. The U.K.'s FTSE 100 Index and the French CAC 40 Index both fell by 0.5 percent.

In the bond market, treasuries moved notably higher amid their appeal as a safe haven. As a result, the yield on the benchmark ten-year, which moves opposite of its price, slid 6.7 basis points to 1.769 percent.

Looking Ahead

News regarding the coronavirus outbreak could continue to impact trading on Wednesday, although the latest earnings news is also likely to attract attention.

Capital One (COF), IBM Corp. (IBM), Netflix (NFLX), and United Airlines (UAL) are among the companies releasing their quarterly results after the close of today's trading.

Healthcare giant Johnson & Johnson (JNJ) is also among the companies due to report their results before the start of trading on Wednesday.

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