Skittish over coronavirus, stock markets end fearful week with more losses

The Dow Jones Industrial Average slumped more than 600 points, or two per cent, on Friday as a virus outbreak that originated in China continued to widen, stoking stock investors' worries about the potential global economic fallout.

The broad sell-off erased gains for the month as a whole, which began with the market at record highs. The broader S&P 500 index posted its second weekly loss and its biggest weekly decline since last summer.

By market close the Dow was down 2.09 per cent, the S&P 500 1.77 per cent and the Nasdaq down 1.59 per cent. In Toronto, the S&P/TSX Composite Index closed down 172.07 points or 0.98 per cent.

The virus has infected almost 10,000 people globally in just two months, a troublesome sign of its spread that prompted the World Health Organization to declare the outbreak a global emergency. That designation signals that the virus is now a significant risk to other countries and requires a global response.

"There is more potential for markets to get affected by the coronavirus than SARS in 2003," said Seema Shah, chief strategist at Principal Global Investors. 

"Asset prices are a lot more over-valued coming into 2020, which means they are already very vulnerable to global sentiment," Shah said.

Cases have spiked in China, along with deaths there, and the U.S. is now advising against all travel to the world's second largest economy.

Technology stocks led the losses. Apple, which relies on Chinese consumers for sales and factories for supplies, fell 3.3 per cent. Nvidia slid 3.1 per cent and other chipmakers slipped.

Airlines were also among the biggest losers. American Airlines fell three per cent and Delta Air Lines slipped 2.1 per cent as both companies suspend flights to and from China.

Banks and energy companies also broadly fell. Exxon and Chevron both fell after issuing fourth-quarter results. 

The S&P 500 had been off to a solid start for the year until concerns about the virus stunted it. The technology-heavy Nasdaq also posted its second straight weekly loss, though it is still holding on to gains for the month of January.

Amazon the exception

Amazon was a standout as a stellar earnings report helped push its market value up by 11 per cent to slightly more than $1 trillion. 

Markets in Asia were mostly lower, though Japan's Nikkei 225 rose one per cent. Indexes in mainland China open next week after an extended shutdown for the Lunar New Year.

European markets were broadly lower. The United Kingdom is officially leaving the European Union later Friday after more than three years of wrangling over the terms of its exit. It's the first time a country has left the trading bloc.