Off The Wire
Defensive stocks lift Wall Street from session lows amid coronavirus worries
(Reuters) - Defensive stocks helped the S&P 500 and the Nasdaq erase losses to trade flat on Thursday, even though a sharp rise in new coronavirus cases in China kept investors worried.
The three main U.S. stock indexes had opened more than 0.5% lower as China reported a record spike in deaths and thousands more infections using a new diagnosis method at a province that is at the center of the outbreak.
A day earlier, investors had bought on signs that the virus spread was slowing, sending the three main indexes to record closing highs.
“The surge in reported cases today is a one-off change due to methodology and by itself, doesn’t imply an acceleration in the pace of infection,” said Seema Shah, chief strategist at Principal Global Investors.
“However, if the change in methodology does result in a rise in the growth rate of reported cases, market sentiment will inevitably deteriorate.”
Lending some support to the market, World Health Organization’s emergency measures director said cases of coronavirus infections were not rising dramatically outside China.
Penn Mutual Asset Management’s chief investment officer, Mark Heppenstall, said U.S. stocks have been particularly resilient because the Federal Reserve and other central banks seem ready to ease monetary policies if required.
Earlier this week, Fed Chair Jerome Powell reiterated his confidence in the U.S. economy in his testimony to the Congress and said the central bank was monitoring the coronavirus and other threats.
At 12:15 a.m. ET, the Dow Jones Industrial Average .DJI slipped 0.14% to 29,509.37.
Real estate .SPLRCR, utilities .SPLRCU and consumer staples .SPLRCS were the biggest percentage gainers among the 11 main S&P sectors.
Among stocks, Cisco Systems Inc (CSCO.O) declined more than 5%, the biggest drag on the three indexes, after the network gear maker’s lackluster revenue and profit forecasts.
NetApp Inc (NTAP.O) fell about 10% as the data storage equipment maker’s current-quarter profit forecast fell short of expectations.
Kraft Heinz Co (KHC.O) shed 8.6% as it missed quarterly sales estimates and wrote down the value of some businesses, including coffee brand Maxwell House, by $666 million.
Advancing issues outnumbered decliners by a 1.02-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.03-to-1 ratio on the Nasdaq.
The S&P index recorded 45 new 52-week highs and three new lows, while the Nasdaq recorded 113 new highs and 45 new lows.
Reporting by Medha Singh and Sruthi Sankar in Bengaluru; Editing by Shounak Dasgupta, Subhranshu Sahu and Saumyadeb Chakrabarty