Coronavirus – the perfect example of a black swan

All 11 sectors in the S&P 500 slumped, as did 25 of the 30 Dow components. Energy and technology stocks suffered the steepest losses, both falling more than 2% in the broad stock-market index.

The coronavirus has infected more than 2,700 people and killed at least 80, mostly in China’s Hubei province, with public-health officials warning that it is growing more contagious. The number of U.S. cases has risen to five and the government is working to evacuate American citizens from the epicenter.

Investors bid down stocks, they bought haven assets such as government bonds, gold, silver and yens.

In addition to developments around the virus, investors will be watching a big week of earnings reports from U.S. companies. With about 17% of S&P 500 companies having reported for the fourth quarter, 70% have topped analysts’ earnings expectations, according to FactSet. Still, analysts are expecting earnings for the S&P 500 as a whole to drop 1.9% from a year earlier, before climbing again in the first quarter of 2020.

Investors also will be keeping an eye on the Federal Reserve’s meeting Wednesday, though the central bank is expected to hold its benchmark rate steady.

 Trader Georgi Bozhidarov

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