On Tuesday, public health officials confirmed the first U.S. case of a peculiar coronavirus in the United States. According to the Centers for Disease Control and Prevention, the patient had recently returned to Washington from Wuhan, China, where an outbreak of pneumonia caused by this novel coronavirus has been ongoing since December 2019. Stocks around the globe traded lower on the news, with emerging markets (specifically Asian countries) amongst the worst performers. By Wednesday sentiment was improving as markets recouped some of their earlier losses after U.S. officials announced they believe the case to be an isolated matter while authorities around the world reassured investors that proactive measures were being taken to contain the virus that has claimed the lives of 17 people in China thus far. In light of new developments on the coronavirus, markets will be largely focused on fourth-quarter corporate earnings which are now in full force. According to MarketWatch, approximately 67% of the S&P 500 companies that have reported earnings have beaten expectations, slightly above the average quarterly beat rate of 65%. On the economic front, housing data remains strong with existing home sales increasing by 3.6% in December. This trend is likely to persist against the backdrop of record-low unemployment, favorable interest rates, and limited supply relative to demand. Purchasing Managers’ Index (PMI) data is expected at the end of this week and should help market participants gauge the current state of manufacturing activity in the U.S. Heading into the weekend, investors will be looking forward to next week’s Federal Open Market Committee (FOMC) meeting to provide guidance on future monetary policy. Interest rates moved lower as investors flocked to the safety of government bonds with the yield on the 10-year treasury trading about 1.77% mid-week.
Source: Morningstar Direct, CNBC, WSJ Market Data, GSAM, Bloomberg