By Geoffrey Smith
Investing.com -- Wall Street took another pummelling at the open on Friday as markets faced up to the prospect of a sharp dip in the Chinese economy due to the coronavirus – one that is likely to be felt around the world in the form of lower commodity demand and disrupted supply chains.
While the figures so far suggest that the disease will be less lethal than the SARS epidemic in 2003, total confirmed cases already top those of SARS, while China’s countermeasures – which include the extension of New Year holidays by another week for over two-thirds of the country’s factories – are sure to be felt across the globe, given that China’s share of the world economy has more than quadrupled since SARS.
By 10:24 AM ET (1524 GMT), the Dow Jones Industrial Average was down 280 points or 1.0%, while the S&P 500 was down 0.7% and the Nasdaq Composite was down 0.5%.
The Dow was on course for a weekly loss of some 1.3%, after disappointing earnings from the country’s two biggest oil and gas companies that hinted again at weakness in the broader economy.
Exxon Mobil (NYSE:XOM) stock fell 3.2% and Chevron (NYSE:CVX) fell 3.3%, after the former announced earnings that suffered from falling margins for refined products and chemicals.
Chevron, meanwhile, became the second major in as many days to make big writedowns on projects that have been made uneconomic. The $10.4 billion in writedowns made the company swing to a big loss in the quarter, albeit not as big as some had feared.
U.S. crude futures fell another 0.6% to $51.92 a barrel on the prospect of ever-greater demand destruction as more airlines canceled flights to China and the broader outlook for the transport sector darkened.
The broad weakness in the market overshadowed a 9.4% surge by Amazon.com (NASDAQ:AMZN) – the biggest intraday rise in market cap in history according to Bloomberg – after it detailed the handsome payoff over the holiday period from investments into one-day delivery that had burdened the previous quarter’s earnings.
Elsewhere, IBM (NYSE:IBM) stock rose 4.6% after company said late on Thursday that long-serving CEO Ginni Rometty will step down, having finally broken a five-year streak of falling revenue in the last quarter of 2019.
The biggest gainer of note, however, was truckmaker Navistar, which rose 54% after Volkswagen’s truck unit Traton – which was spun off last year – offered $2.9 billion for the company.
Elsewhere, gold futures fell 0.1% despite the general surge in risk aversion, while copper futures fell to their lowest in over three years at $2.51 a pound.