Stocks - Wall Street off Lows, but Under Pressure as Selling in Tech Turns Ugly

By Yasin Ebrahim

Investing.com – Wall Street moved off session lows but remain under pressure Thursday, paced by selling in tech stocks as investors continued to assess the Covid-19 virus outbreak.

The S&P 500 slipped 0.72%, the Nasdaq Composite lost 1.12% and the Dow Jones Industrial Average fell 0.69%.

It wasn’t immediately clear what triggered the sudden move lower in stocks. But reports of a sharp increase in infections in Beijing dampened hopes that China’s capital would be able to resume normal operations sooner rather than later.

A hospital in Beijing has reported 36 new coronavirus cases as of Thursday, a sharp increase in the number of cases reported in the capital city, taking the total cases to 45, Chinese state-run Global Times reported.

Beijing recently ramped up measures to prevent the spread of the virus including restrictions on movements and a ban on public gatherings that forced schools to shut down.

Tech led the broader decline lower amid worries about prolonged disruptions to supply chains in China at a time when several companies, including Apple (NASDAQ:AAPL), Procter & Gamble (NYSE:PG) and 3M (NYSE:MMM), have cautioned on outlook as the virus outbreak continues.

A slew of mixed earnings from corporates before the open, meanwhile, did little to help sentiment on stocks.

Six Flags (NYSE:SIX) slumped 18% after the theme park operator delivered a softer outlook on profit and cut its dividend by nearly 70% amid a surprise loss in the fourth quarter.

ViacomCBS (NASDAQ:VIAC) plunged 17% to a 52-week low after its earnings missed estimates and guidance was weak.

Zillow (NASDAQ:ZG) bucked the trend, rising 19%, after its fourth-quarter losses were not as bad as Wall Street had estimates amid a ramp-up in activity on its housing platform.

In deal news, Morgan Stanley (NYSE:MS) bought discount broker E-Trade (NASDAQ:ETFC) for $13 billion, sending shares of latter up 24%.

Some on Wall Street, however, were critical of the shares-only deal, which will dilute the bank’s stock, with Wells Fargo (NYSE:WFC) calling it “value destroying.” Wells Fargo downgraded Morgan Stanley to equal-weight from overweight and cut its price target on the stock to $58 from $65.

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