The Dow Jones Industrial Average fell sharply Thursday morning, along with the S&P 500 and Nasdaq. The Centers for Disease Control said there is a U.S. coronavirus of possible unknown origin, raising fears that the virus is beginning to spread in America.
XThat came after President Donald Trump spoke on the coronavirus crisis late Wednesday. Microsoft (MSFT) and PayPal (PYPL) warned they will miss sales targets due to the outbreak, following warnings from Apple (AAPL) and Mastercard (MA).
Microsoft stock and PayPal stock retreated Thursday, along with Apple stock, Mastercard stock and other big-cap leaders such as Tesla (TSLA), Advanced Micro Devices (AMD) and Amazon.com (AMZN).
Earlier, Wednesday's stock market rally attempt fizzled as the Covid-19 virus continued to spread around the globe.
Meanwhile, Carvana (CVNA), Square (SQ), Teladoc Health (TDOC), Anaplan (PLAN) and Etsy (ETSY) offered notable earnings reports overnight. Gilead Sciences (GILD) announced trials for its antiviral Remdesivir to treat the coronavirus.
Carvana and Anaplan tumbled. Square, Etsy and Teladoc stock also jumped. So did Gilead stock.
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Stock Market On Coronavirus Quarantine
Microsoft has been holding up relatively well in the coronavirus stock market correction, closing Wednesday above its 50-day line. The stock remains worth watching. Investors should look for quality stocks with strong relative strength lines, signaling outperformance vs. the S&P 500 index. But as the Microsoft warning underscores, this isn't a good time to be buying. Until coronavirus fears fade and a new market rally takes hold, consider stocks to be in quarantine.
Microsoft, Mastercard and AMD stocks are on the IBD 50 list of top-rated stocks. Mastercard and Microsoft stock are long-term leaders. Apple, Tesla, AMD and Mastercard are all on IBD Leaderboard.
Dow Jones Today
The Dow Jones Industrial Average slid 2.1%. The S&P 500 sank 2.3%, and the Nasdaq sold off 2.7%. Microsoft stock is a Dow Jones, S&P 500 and Nasdaq component. Apple, also a triple-index name, pulled back as well. Mastercard, Amazon, Tesla and many other big caps did too.
Dow Jones futures have been volatile for the past few days, which is common during stock market corrections.
Coronavirus News
The CDC said a new coronavirus case in Northern California is the first possible coronavirus case of "community origin." That means the infection's origin is unknown, making it hard to stop the spread. Previous Covid-19 cases in the U.S. could be tied to a specific origin, such as people who recently traveled to Hubei or were in contact with such travelers.
The U.S. has a total of 60 coronavirus cases.
Trump spoke on the coronavirus outbreak Wednesday night. He was upbeat on coronavirus containment and expects vaccines soon, reiterating that he is requesting $2.5 billion in funds. He put Vice President Mike Pence in charge of coronavirus prevention.
The number of China coronavirus cases is still trending lower, with few outside of Hubei province. But Covid-19 cases continue to proliferate. South Korea and Italy coronavirus cases are rising rapidly, while several countries reported their first cases. South Korea virus cases have jumped to 1,766, while Italy has 528. Iran has 245.
Microsoft Coronavirus Warning
Late Wednesday Microsoft said that it won't meet current-quarter revenue targets, citing the coronavirus impact on its PC suppliers and manufacturers in China. Microsoft stock fell 2.5%, pushing below its 50-day line.
PayPal said early Thursday that revenue will likely come in low due to the coronavirus. PayPal stock fell 0.6%.
Last week, Apple said it would miss sales targets due the virus's impacts on iPhone production and demand in China. Mastercard said earlier this week that the coronavirus will likely hit first-quarter and full-year revenue growth slightly.
China's economy still is reeling from coronavirus-related shutdowns and lockdowns. The global economy and a slew of industries are going to take a hit. The question is: how long and how much? The Microsoft, Apple and Mastercard coronavirus warnings are only among the first of many expected.
If the coronavirus becomes widespread, U.S. companies will have zero earnings growth in 2020, Goldman Sachs predicted.
Tesla stock sank 6.7% and AMD stock retreated almost 4% early Thursday, as investors continue to price in coronavirus impact on supply and demand in China and the world. Tesla China registrations plunged 46% in January vs. a year earlier to 3,563. Of those, 2,605 were China-built Tesla vehicles.
Amazon stock fell 3%, as many goods on its site hail from China. Mastercard stock slid and Apple stock sank more than 3% after both have sold off since their coronavirus warnings.
On the plus side, Gilead stock is among the many biotechs rallying on coronavirus drug or vaccine hopes. Gilead stock climbed 1% in early trade. Moderna (MRNA) and Novavax (NVAX), which are ready to test experimental Covid-19 vaccines, also extended gains. All three stocks have been big winners lately. Telemedicine specialist Teladoc, also a coronavirus play, spiked 23% on its earnings.
Current Stock Market Correction
A new stock market rally attempt started off with strong morning gains Wednesday, but the major indexes faded.
The Dow Jones Industrial Average closed down 0.5%, while the S&P 500 index lost 0.4%. The Nasdaq composite rose 0.2%, well off session highs. That's despite Apple and Microsoft shares both rising more than 1%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slid 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.2%. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.6%.
Eventually, a new stock market rally attempt will truly get underway. But wait for a confirmed stock market rally before getting off the sidelines.
Earnings
Carvana reported a wider-than-expected loss, though revenue topped. Carvana stock plunged below a buy point and its 50-day line.
Square stock jumped on earnings, moving back toward a buy point.
Etsy stock jumped on strong earnings, signaling a move back up to its 200-day line.
Anaplan stock crashed 27% despite better-than-expected earnings and in-line guidance.
Please follow Ed Carson on Twitter via @IBD_ECarson for stock market updates and more.
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