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Renewed Coronavirus Worries Lead To Sell-Off On Wall Street

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Stocks showed a substantial move to the downside during trading on Friday, adding to the losses posted in the previous session. The Nasdaq and the S&P 500 pulled back further off the record closing highs set on Wednesday.

The major averages all closed firmly in the red, although the tech-heavy Nasdaq posted a particularly steep loss. While the Nasdaq plunged 174.37 points or 1.8 percent to 9,576.59, the Dow slid 227.57 points or 0.8 percent to 28,992.41 and the S&P 500 tumbled 35.48 points or 1.1 percent to 3,337.75.

For the week, the Nasdaq slumped by 1.6 percent, while the Dow and the S&P 500 fell by 1.4 percent and 1.3 percent, respectively.

The sell-off on Wall Street came as traders continued to keep a close eye on the latest coronavirus news, with Chinese officials reporting 1,109 new confirmed cases of the coronavirus, up sharply from 349 cases the previous day.

South Korean health authorities also reported 52 new cases of the fast-spreading disease, raising the national tally to 156, while the number of confirmed cases in Japan increased by 23 to 728.

A number of companies have warned about the impact of the coronavirus, with Coca-Cola (KO) forecasting the outbreak will trim 1 to 2 cents per share off its first quarter earnings.

Semiconductor and software stocks extended the sharp pullback seen in the previous session, with the Philadelphia Semiconductor Index and the Dow Jones U.S. Software Index plunging by 3 percent and 2.7 percent, respectively.

With the continued weakness on the day, both indexes pulled back further off the record closing highs set on Wednesday.

Significant weakness was also visible among oil service stocks, as reflected by the 2.6 percent slump by the Philadelphia Oil Service Index.

The weakness in the oil service sector came amid a decrease by the price of crude oil, with crude for April delivery falling $0.50 to $53.58 a barrel.

Natural gas, brokerage, and computer hardware stocks also saw considerable weakness on the day, moving lower along with most of the other major sectors.

Meanwhile, gold stocks were among the few groups to buck the downtrend, with the NYSE Arca Gold Bugs Index soaring by 4 percent to its best closing level in well over three years.

The rally by gold stocks came amid a jump by the price of the precious metal, as gold for April delivery spike $28.30 to $1,648.80 an ounce.

On the U.S. economic front, the National Association of Realtors released a report showing a pullback in existing home sales in the month of January.

NAR said existing home sales slumped by 1.3 percent to an annual rate of 5.46 million in January after surging up by 3.9 percent to a revised rate of 5.53 million in December. Economists had expected existing home sales to tumble by 1.8 percent.

Despite the monthly decrease, the report noted existing home sales in January were up by 9.6 percent compared to the same month a year ago.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index slumped by 1.1 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 0.4 percent, the French CAC 40 Index and the German DAX Index slid by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries extended the notable upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.4 basis points to a five-month closing low of 1.471 percent.

Looking Ahead

Coronavirus news is likely to remain in the spotlight next week, although traders are also likely to keep an eye on reports on consumer confidence, new home sales, durable goods orders, and personal income and spending.

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