By Yasin Ebrahim
Investing.com – The S&P recouped some losses following a sudden selloff Thursday, as investors reassessed the threat of the coronavirus on growth as reports of sharp uptick in infections in Beijing weighed on sentiment.
The S&P 500 slipped 0.38%, the Nasdaq Composite lost 0.67% and the Dow Jones Industrial Average fell 0.44%.
Over recent days, investors have cheered signs the spread of the coronavirus in China, named Covid-19, could be slowing, but reports of a sharp increase in infections in Beijing and outside of mainland China has gripped investor attention.
A hospital in Beijing has reported 36 new cases as of Thursday, a sharp increase in the number of cases reported in the capital city, taking the total cases to 45, denting hopes that China, the world's factory, could resume normal activity.
Several companies, including Apple (NASDAQ:AAPL), Procter & Gamble (NYSE:PG) and 3M (NYSE:MMM) have cautioned on outlook, forcing some to reassess expectations about the impact the outbreak will have on growth. Goldman Sachs (NYSE:GS) warned investors against taking the threat too lightly.
"In the nearer term…we believe the greater risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the risks of a correction are high," Goldman Sachs (NYSE:GS) Chief Global Equity Strategist Peter Oppenheimer told clients.
Tech was the worst hit, falling 1%, with chip stocks giving back gains from a day earlier and large-caps like Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) parent Alphabet (NASDAQ:GOOG) adding to the broader downside move.
Stocks got the session underway on the back foot as investors had to contend with mixed quarterly reports.
Six Flags (NYSE:SIX) slumped 16% after the theme park operator delivered a softer outlook on profit and cut its dividend by nearly 70% amid a surprise loss in the fourth quarter.
ViacomCBS (NASDAQ:VIAC) plunged 18% to a 52-week low after its earnings missed estimates and guidance was weak.
Zillow (NASDAQ:ZG) bucked the trend, rising 17%, after its fourth-quarter losses were not as bad as Wall Street had estimates amid a ramp-up in activity on its housing platform.
In deal news, Morgan Stanley (NYSE:MS) bought discount broker E-Trade (NASDAQ:ETFC) for $13 billion, sending shares of latter up 22%.
Some on Wall Street, however, were critical of the shares-only deal, which will dilute the bank’s stock, with Wells Fargo (NYSE:WFC) calling it “value destroying.” Wells Fargo downgraded Morgan Stanley to equal-weight from overweight and cut its price target on the stock to $58 from $65.