Dow Wobbles as Coronavirus Clobbers Stock Market Earnings Forecasts

The Dow Jones Industrial Average (DJIA) fell for a second consecutive day on Friday after one of its “safety stocks” warned that the coronavirus outbreak had put a dent in its earnings guidance. St. Louis Federal Reserve President James Bullard appeared on CNBC to calm investor fears about the disease, which he claims will “blow over” after a “temporary shock.”

But investors aren’t so sure. They expect the Fed to cut interest rates to support the stock market, something the central bank appears reluctant to do. The stock market suffered an unexpected bout of volatility on Thursday. The Dow fell more than 400 points from its daily high before a recovery slashed those losses to just 128 points. The Dow whipsawed back into decline on Friday, dropping 122.54 points or 0.42% to 29,097.44.

The S&P 500 fell 0.44% to 3,358.55. The Nasdaq slid 0.41% to 9,710.60 to round out a moderately-bearish day on Wall Street. Defensive stock Coca-Cola said today that it expects coronavirus to have a 1-to-2 penny impact on its first-quarter earnings, although it currently expects to meet its full-year target. Apple, the Dow’s second most heavily weighted component, rattled Wall Street earlier in the week when it advised investors that it would not meet its fiscal second-quarter guidance. Both Apple and Coca-Cola have significant exposure to China, but Goldman Sachs doesn’t believe they’ll be the only ones to take an earnings hit from the coronavirus outbreak. The investment bank told clients that the stock market has failed to price in how severely the virus will bleed profits.

Dow Wobbles as Coronavirus Clobbers Stock Market Earnings Forecasts, Bloomberg, Feb 21