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Coronavirus Uncertainty May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat opening on Friday, with stocks likely to extend the choppy trading seen over the course of the previous session.

Upbeat earnings news from companies like Nvidia (NVDA) and Expedia (EXPE) generated some positive sentiment earlier this morning.

The futures have pulled back near the unchanged line, however, as traders keep an eye on the latest developments on the coronavirus front.

Nearly 64,000 people are now recorded as having been made ill by the virus in China, with the last two days showing a steep rise after a change in diagnostic methods.

Traders are also digesting a report from the Commerce Department showing U.S. retail sales increased in line with economist estimates in the month of January.

After coming under pressure early in the session, stocks fluctuated over the course of the trading day on Thursday. The Nasdaq and the S&P 500 recovered from the early weakness to reach new record intraday highs but eventually returned to negative territory.

The major averages all finished the session in the red. The Dow fell 128.11 points or 0.4 percent to 29,423.31, the Nasdaq edged down 13.99 points or 0.1 percent to 9,711.97 and the S&P 500 dipped 5.51 points or 0.2 percent to 3,373.94.

Profit taking contributed to initial weakness on Wall Street, as some traders looked to cash in on recent gains amid news of a jump in new coronavirus cases.

Officials revealed an additional 242 deaths from the coronavirus in the Chinese province of Hubei as well as 14,840 new confirmed cases.

While the jump in confirmed cases was partly due to the adoption of new methodology for counting infections, the spike still led to renewed fears about the outbreak.

However, traders have recently been able to shrug off concerns about the coronavirus amid optimism that the outbreak will eventually be contained.

The early weakness on Wall Street was subsequently seen as another buying opportunity for some traders even as a number of companies continue to warn about the impact of the outbreak.

On the U.S. economic front, the Labor Department released a report showing a modest increase in consumer prices in the month of January.

The Labor Department said its consumer price index inched up by 0.1 percent in January after rising by 0.2 percent in December. Economists had expected prices to increase by 0.2 percent.

Core consumer prices, which exclude food and energy prices, rose by 0.2 percent in January after ticking up by 0.1 percent in the previous month. The increase in core prices matched economist estimates.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits inched up by less than expected in the week ended February 8th.

The report said initial jobless claims crept up to 205,000, an increase of 2,000 from the previous week's revised level of 203,000.

Economists had expected jobless claims to rise to 210,000 from the 202,000 originally reported for the previous week.

Despite the volatility shown by the broader markets, computer hardware stocks saw significant weakness throughout the session. Reflecting the weakness in the sector, the NYSE Arca Computer Hardware Index tumbled by

NetApp (NTAP) led the sector lower, plunging by 9.3 percent after the data storage company reported fiscal third quarter results that missed analyst estimates and announced the retirement of its CFO.

Pharmaceutical, oil service and telecom stocks also showed notable moves to the downside on the day, contributing to the lower close by the broader markets.

On the other hand, gold stocks showed a strong move to the upside, driving the NYSE Arca Gold Bugs Index up by 1.2 percent. The strength among gold stocks comes amid an increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are climbing $0.68 to $52.10 a barrel after rising $0.25 to $51.42 a barrel on Thursday. Meanwhile, after advancing $7.20 to $1,678.80 an ounce in the previous session, gold futures are inching up $1.50 to $1,580.30 an ounce.

On the currency front, the U.S. dollar is trading at 109.76 yen versus the 109.82 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0854 compared to yesterday's $1.0841.

Asia

Asian stocks ended mixed on Friday after an early-sell off, as the death toll from China's virus epidemic neared 1,400, raising fears of more global contagion.

Nearly 64,000 people are now recorded as having been made ill by the virus in China, with the last two days showing a steep rise after a change in diagnostic methods.

Meanwhile, the United States and China have lowered tariffs on each other's goods today as part of the phase one trade agreement.

Chinese stocks rose to post their first weekly gain in four on hopes the government will unveil more measures to contain the coronavirus outbreak and limit its economic impact.

The benchmark Shanghai Composite Index climbed 10.93 points, or 0.4 percent, to 2,917.01 and ended the week up by 1.4 percent. Hong Kong's Hang Seng Index rose 0.3 percent to 27,815.60.

Meanwhile, Japanese stocks declined as investors continued to fret about the economic impact as well as the spread of the coronavirus outbreak. The Nikkei 225 dropped 140.14 points, or 0.6 percent, to 23,687.59, while the broader Topix closed 0.6 percent lower at 1,702.87.

A firmer yen weighed on export-related stocks, with Canon and Honda Motor losing around 1 percent. Panasonic shed 1.5 percent. Nissan Motor plunged 9.6 percent to its lowest in 10-1/2 years after the struggling automaker cut its annual operating profit forecast by 43 percent.

On the other hand, Toshiba Corp. advanced 2.3 percent after the industrial conglomerate maintained its outlook for group operating profit for the fiscal year through March. Semiconductor silicon wafer maker Sumco Corp. surged 6.9 percent.

Australian markets eked out modest gains as encouraging earnings news eclipsed underlying worries over the spread of the coronavirus. The benchmark S&P/ASX 200 Index rose 27.00 points, or 0.4 percent, to 7,130.20, while the broader All Ordinaries Index gained 22.50 points, or 0.3 percent, to finish at 7,227.10.

Commonwealth Bank of Australia rallied 2.6 percent to extend recent gains after posting better than expected cash earnings for the half-year. National Australia Bank surged 3.3 percent after announcing it is considering a fresh share sale.

FAR slumped 8.8 percent after the oil explorer lost its long-running arbitration case to Woodside Petroleum. Shares of the latter declined 2.7 percent. Gold miners ended mostly lower despite gold prices rising overnight on safe-haven appeal.

Seoul stocks advanced on hopes of global measures to soften the impact of the coronavirus outbreak. The benchmark Kospi rose 10.63 points, or 0.5 percent, to 2,243.59, led by technology companies. Market heavyweight Samsung Electronics advanced 1.8 percent, while No. 2 chipmaker SK Hynix added 2.5 percent.

Europe

European shares are mixed on Friday after data showed the German economy stagnated in the fourth quarter, reviving fears of a recession.

The euro area economy steadied in the fourth quarter, with the bloc's quarterly reading coming in at 0.1 percent, matching expectations.

On the trade front, the United States and China have lowered tariffs on each other's goods today as part of the phase one trade agreement.

Concerns over the coronavirus outbreak eased somewhat after the World Health Organization said there was no major shift in the coronavirus's pattern of mortality or severity, despite a dramatic increase in Hubei province.

While the French CAC 40 Index is down by 0.1 percent, the U.K.'s FTSE 100 Index is up by 0.1 percent and the German DAX Index is up by 0.2 percent.

Shares of Crédit Agricole have moved to the downside despite the bank's fourth quarter net profit coming in above expectations.

Wirecard shares have also declined. The provider of electronic payment and risk management applications reiterated its 2020 guidance after reporting strong quarterly results.

Royal Bank of Scotland Group shares have also slumped, as the bank cut its medium-term returns target after reporting a jump in annual profits.

AstraZeneca has also moved lower after the drug maker's core operating profit for the final quarter of the year missed expectations.

Miners are broadly lower after copper prices fell on the London Metal Exchange on concerns surrounding the demand outlook for the metal.

On the other hand, Renault has moved to the upside. The car maker posted an annual loss of 141 million euros ($153 million) - its first in 10 years. The company also slashed its annual demand and warned that auto demand remains volatile.

Electric utility EDF has soared after its net income, Group share, rose more than four-fold for the full year, with 4 percent growth in sales.

Property investment and development company SEGRO has also risen despite its pre-tax profit falling 18 percent in 2019.

U.S. Economic Reports

Retail sales in the U.S. increased in line with economist estimates in the month of January, according to a report released by the Commerce Department on Friday.

The Commerce Department said retail sales rose by 0.3 percent in January after edging up by a downwardly revised 0.2 percent in December.

Economists had expected retail sales to climb by 0.3 percent, matching the increase originally reported for the previous month.

Excluding sales by motor vehicles and parts dealers, retail sales still rose by 0.3 percent in January after climbing by 0.6 percent in December. Ex-auto sales were also expected to increase by 0.3 percent.

A separate report released by the Labor Department showed U.S. import prices came in flat in the month of January, while export prices unexpectedly showed a notable rebound.

The Labor Department said import prices were unchanged in January after rising by a downwardly revised 0.2 percent in December.

Economists had expected import prices to dip by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Meanwhile, the report said export prices climbed by 0.7 percent in January after slipping by 0.2 percent in December. Export prices had been expected to edge down by 0.1 percent.

The Federal Reserve is scheduled to release its report on industrial production in the month of January at 9:15 am ET. Economists expected industrial production to dip by 0.2 percent in January after falling by 0.3 percent in December.

At 10 am ET, the University of Michigan is due to release its preliminary reading on consumer sentiment in the month of February. The consumer sentiment index is expected to edge down to 99.5 in February after inching up to 99.8 in January.

The Commerce Department is also scheduled to release its report on business inventories in the month of December at 10 am ET. Business inventories are expected to inch up by 0.1 percent.

Stocks In Focus

Shares of Expedia (EXPE) are moving sharply higher in pre-market trading after the travel website reported better than expected fourth quarter results and forecast double-digit profit growth in 2020.

Graphics chip maker Nvidia (NVDA) is also likely to see initial strength after reporting fourth quarter results that exceeded analyst estimates and providing upbeat guidance.

On the other hand, shares of Arista Networks (ANET) are seeing pre-market weakness even though the networking company reported better than expected fourth quarter results.

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