Dow Plunged 1,000 Points This Week After Reddit Traders Stormed The Stock Market–What Happens Next?

Despite blowout corporate earnings and more solid news on the vaccine front, the stock market just posted its worst weekly performance in three months after Reddit traders squeezed Wall Street’s elite out of billions of dollars, sending prices of heavily shorted stocks up to atmospheric new highs and fueling concerns over market frothiness–but experts seem in broad agreement that the bull market can rage on. 

Key Facts

Investor sentiment took a massive hit over the “relentless option buying by retail investors taking advantage of a structural weakness in market,” Oanda Senior Market Analyst Edward Moya said Friday, noting that the Dow’s 1,000-point plunge this week was the index’s worst weekly loss since election uncertainty tanked sentiment in late October. 

“The market is not broken, but recent events have revealed some cracks,” says Commonwealth Financial Network Chief Investment Officer Brad McMillan, who thinks one likely result of the week’s frenzy could be that the price of options–which helped fuel some of the outsized meme-stock demand–rise to help curb “price hacking” in the future.

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McMillan eschews concerns from other experts that the Reddit-fueled price mania could be a sign the market is in the middle of a bubble akin to the dot-com era in the late 1990s, but he says “crackdown” by regulators is likely.

The big question surrounding the week’s short squeeze remains around how regulators–and prosecutors–will respond to the volatility, with lawmakers urging the SEC to act quickly on investigations into potential market manipulation by retail traders, brokerages and hedge funds alike. 

Like McMillan, LPL Financial Chief Market Strategist Ryan Detrick is also adamant that the week’s events are not indicative of a market bubble or impending correction, though he concedes recent events point to “excessive optimism in certain segments of the equity markets,” particularly in big-cap names losing capital from institutions covering shorts at sizable losses.

“Don’t forget, overall market breadth is extremely healthy, and the credit markets are functioning just fine—we don’t see a repeat of 1999 like some are claiming,” says Detrick.

Crucial Quote 

“The damage this week is real, but it is also part of the game: Hedge funds and banks routinely make mistakes and suffer for it, and traders losing money is not a sign that the system is broken,” says McMillan. “Another source of worry is that somehow markets have become less reliable because of the price surges–perhaps so, but the dot-com boom didn’t destroy the capital markets, and the distortions were much greater then than now.”

Surprising Fact

Meme stocks GameStop and AMC skyrocketed 400% and 275%, respectively, this week, while the Dow, S&P 500 and tech-heavy Nasdaq all fell about 3%.

What We Don’t Know

How long the retail trading frenzy may continue. Meme stocks largely surged Friday, and Erlam says “a solution for this entire market dislocation will take time, which suggests this insane trading will continue a little while longer.”

Key Background

The bull market rallied to new highs earlier this month in light of fiscal stimulus expectations, vaccine optimism and corporate earnings that keep surpassing expectations. Democrats this week have indicated they’ll move forward with stimulus even if they can’t muster up much Republican support, and–though disappointing–Johnson & Johnson’s vaccine candidate results mean another vaccine could reach the market soon, notes Vital Knowledge Media Founder Adam Crisafulli. Meanwhile, big firms like Apple, Microsoft and Tesla all smashed earnings expectations this week.

 

What To Watch For

Sen. Elizabeth Warren (D-Mass.) has asked the SEC to respond to a list of questions about its GameStop response by February 5. That includes details over whether Reddit traders, hedge funds and brokerages may have influenced the market. With regards to the Reddit crowd, veteran trader Richard Smith, who heads up the Foundation for the Study of Cycles, said Thursday they could “absolutely” be vulnerable to regulatory scrutiny from a pump-and-dump standpoint, but he says it could be years before the mechanisms behind their market influence are leveled. McMillan, meanwhile, says he sees evidence of the “pump,” but doesn’t believe they’re looking to sell anytime soon.

Further Reading

‘Bubble Fueled By Cynicism’: Meme Stocks Surge Again As Reddit Traders Pile Back In—But Dow Falls 300 Points (Forbes)

The Hedge Fund Genius Who Started GameStop’s 4,800% Rally Now Calls It “Unnatural, Insane, And Dangerous” (Forbes)

Robinhood Raises $1 Billion In Emergency Funds As Platform Struggles With Reddit-Fuelled Trading Surge (Forbes)

Not Just GameStop: Here Are The Meme Stocks WallStreetBets Traders Are Pumping Up During This ‘Extremely Erratic’ Reddit Rally (Forbes)

Warren Demands SEC Response To GameStop Frenzy After It Vows To Protect Retail Traders From ‘Abusive Or Manipulative’ Activity (Forbes) Follow me on Twitter. Send me a secure tip

Jonathan Ponciano

Jonathan Ponciano

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

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Business News 2.8K subscribers Despite blowout corporate earnings and more solid news on the vaccine front, the stock market just posted its worst weekly performance in three months after Reddit traders squeezed Wall Street’s elite out of billions of dollars, sending prices of heavily shorted stocks up to atmospheric new highs and fueling concerns over market frothiness–but experts seem in broad agreement that the bull market can rage on.”The damage this week is real, but it is also part of the game: Hedge funds and banks routinely make mistakes and suffer for it, and traders losing money is not a sign that the system is broken,” says McMillan. “Another source of worry is that somehow markets have become less reliable because of the price surges–perhaps so, but the dot-com boom didn’t destroy the capital markets, and the distortions were much greater then than now.”

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Top Dividend Stocks for January 2021

Dividend stocks are companies that pay out a portion of their earnings to a class of shareholders on a regular basis. These companies usually are well established, with stable earnings and a long track record of distributing some of those earnings back to shareholders. These distributions are known as dividends, and may be paid out in the form of cash or as additional stock. Most dividends are paid out on a quarterly basis, but some are paid out monthly, annually, or even once in the form of a special dividend. While dividend stocks are known for the regularity of their dividend payments, in difficult economic times even those dividends may be cut in order to preserve cash.

One useful measure for investors to gauge the sustainability of a company’s dividend payments is the dividend payout ratio. The ratio is a measure of total dividends divided by net income, which tells investors how much of the company’s net income is being returned to shareholders in the form of dividends versus how much the company is retaining to invest in further growth. If the ratio exceeds 100% or is negative (meaning net income is negative), this indicates the company may be borrowing to pay dividends. In these two cases, the dividends are at a relatively greater risk of being cut.

Below, we look at the top 5 dividend stocks in the Russell 1000 by forward dividend yield, excluding companies with payout ratios that are either negative or in excess of 100%. Each of the dividend stocks listed below significantly underperformed the Russell 1000’s total return over the past 12 months of 19.7%, as of December 21, 2020.1 All data below is as of December 22, 2020.

Lumen Technologies Inc. (LUMN)

  • Forward Dividend Yield: 10.08%
  • Payout Ratio: 86.56%
  • Price: $9.92
  • Market Cap: $10.9 billion
  • 1-Year Total Return: -17.7%1

Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers services including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.

Brookfield Property REIT Inc. (BPYU)

  • Forward Dividend Yield: 8.86%
  • Payout Ratio: 63.63%
  • Price: $15.01
  • Market Cap: $587.3 million
  • 1-Year Total Return: -10.0%1

Brookfield Property is a real estate investment trust (REIT) that owns, develops, builds, manages, and leases various commercial properties. Among the company’s portfolio of properties are restaurants, malls, entertainment facilities, and parking areas. On November 6, the board of directors declared a quarterly dividend of $0.3325 per share on its Class A Stock payable on December 31, 2020, and a quarterly dividend on the 6.375% Series A Cumulative Redeemable Preferred Stock of $0.39844 per share payable on January 1, 2021.2

New York Community Bancorp Inc. (NYCB)

  • Forward Dividend Yield: 6.65%
  • Payout Ratio: 82.59%
  • Price: $10.22
  • Market Cap: $4.7 billion
  • 1-Year Total Return: -8.3%1

New York Community Bancorp is a holding company with multiple banking subsidiaries, including Queens County Savings Bank, Roosevelt Savings Bank, Atlantic Bank, and others. Through these subsidiaries, New York Community Bancorp offers a full range of banking products and services to businesses and consumers. The company primarily serves customers in the New York City metropolitan area.

Brandywine Realty Trust (BDN)

  • Forward Dividend Yield: 6.50%
  • Payout Ratio: 43.84%
  • Price: $11.69
  • Market Cap: $2.0 billion
  • 1-Year Total Return: -20.2%1

Brandywine Realty Trust is a REIT that owns, manages, leases, acquires, and develops urban, downtown, and suburban office properties primarily on the East Coast and in Texas. Its services include asset management, development and construction, investment, marketing and leasing, and property management. On December 8, the board declared a quarterly cash dividend of $0.19 per common share and OP Unit payable on January 20, 2021. The quarterly dividend is equivalent to an annual rate of $0.76 per share.3 

TFS Financial Corp. (TFSL)

  • Forward Dividend Yield: 6.41%
  • Payout Ratio: 66.57%
  • Price: $17.47
  • Market Cap: $4.9 billion
  • 1-Year Total Return: -6.8%1

TFS Financial is a holding company engaged in retail consumer banking, mortgage lending, and similar services through its subsidiaries. The company’s businesses include originating and servicing residential real estate mortgage loans and attracting retail deposits. Its main business is retail consumer banking.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors.

Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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Top 10 Dividend Stocks – January 2021! In this video I show the top 10 stocks in January of 2021 that the thousands of dividend investors on my discord server (https://discord.gg/kkSr5FY) had the opportunity to vote for that they were buying or planning to buy. Then I’ll end this video with a powerful life story that is worth hearing and reflecting on, so I recommend you watch this entire video. Referral Link to M1 ➜ https://m1.finance/AUzJllYh-gGh To get access to my Spreadsheet 2.0 then please sign up as a Patreon Aristocrat or King (and double check my Patreon site to ensure I’m still offering access, as I only have limited seats available). You also get other perks for signing up including the ability to watch my videos on my Discord before I release them to the public, and the ability to vote on what thumbnail I’ll use in some of my future videos, and you gain direct access to me.

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How Determining the Dividend Rate Pays off for Investors The dividend is the percentage of a security’s price paid out as dividend income to investors. more

Special Dividend A special dividend is a non-recurring distribution of company assets, usually in the form of cash, to shareholders. more

Dividend Yield Definition The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. more

Dividend Payout Ratio Definition The dividend payout ratio is the measure of dividends paid out to shareholders relative to the company’s net income. more

Dividend Clientele Dividend clientele refers to a group of shareholders that have a common preference for a company’s dividend policy. more

Dividend Definition A dividend is the distribution of some of a company’s earnings to a class of its shareholders, as determined by the company’s board of directors. more

6 Stocks Set To Soar In 2021

It’s crystal ball time. Technology and environmental stocks have been the big winners of 2020, but which stocks will skyrocket next year? The enforced digitisation of the world during the pandemic drove the likes of Amazon, Apple, Google and Netflix to new highs, while making household names of companies such as Zoom.

Coronavirus vaccine breakthroughs in November sparked a much-vaunted rotation in market leadership from the “stay at home” play to “the reopening trade”. Many believe this has much further to run, with the potential for missteps along the way around mass vaccination delivery or central bank policy.  

Here are six stocks analysts are backing to shine in the New Year.

Cineworld

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The cinema chain, which has screens across the U.S. and U.K., has been an archetypal business victim of the pandemic. Worst still, it went into the pandemic with $8 billion of net debt, following two highly leveraged acquisitions in recent years. Investors took flight, with the stock collapsing by just over 90% as lockdown was announced.

It has rallied by 122% since November, driven by the vaccine news, plus a fundraising and new $450m debt facility. MORE FOR YOUWhy Huawei’s New Update Is Seriously Bad News For Android UsersWhatsApp Users Suddenly Get This Surprise New Boost From FacebookHuawei’s Striking New Billion-Dollar Gamble Targets Apple, Google (And Tesla)

Neil Wilson, chief market analyst at Markets.com, is backing Cineworld as a higher risk reopening trade. “This new debt facility should act as a bridge to get to a point where it can reopen screens in the U.K. and the U.S. and get the cash flow moving in the right direction again,” he said.

Assuming it can reopen its screens fully in May, it has sufficient cash to cover “2021 and beyond”. However, “if there is a stock trading on this vaccine roll-out it’s Cineworld”, he cautioned. 

Tekmar 

Tekmar operates in power and telecommunications infrastructure, delivering systems that protect cables under the sea. It’s a niche area, but fast-growing, with offshore wind projects a big customer.

AJ Bell investment director Russ Mould describes the U.K. micro-cap stock as high risk, given its size, but believes it can deliver for patient, longer-term investors.

Tekmar’s shares have sold off sharply in 2020, down 61.9%, in part down to contract delays that can punish small businesses disproportionately.

But Mould points to the company having net cash of £36 million -against a net asset value of £46 million- cost-cutting, and a new product launch due in 2021.

“Meanwhile, the company’s leading position in the niche of protection systems for subsea cables and pipes offers plenty of scope for upside. There are surely few markets as packed with potential as this one, as the UK prepares to launch its green industrial revolution and throw money at wind power, an area where Tekmar’s skills are likely to be in high demand,” he said.

Vulcan Materials

American building supplier Vulcan Materials has lagged the bounceback in U.S. equities, still trading down 3.8% for the year. Some analysts have highlighted the company’s hefty debt burden, at around three times earnings before interest, depreciation and tax as a red flag to investors.

However, Steve Clayton, head of equity funds at Hargreaves Lansdown, believes Vulcan is solidly positioned to prosper from the expected further financial stimulus under president-elect Joe Biden.

“Vulcan sells building aggregates like gravel and because these are expensive to transport, Vulcan benefit from local monopolies and oligopolies, giving them reliable pricing power in what should be increasingly active markets,”

With the requirement for extensive new housebuilding and infrastructure development in the U.S., he rates the stock a good play for more balanced investors.

IAG

British Airways owner IAG is a classic reopening trade. Its stock was pummelled earlier in the year as flight routes, down just over 74% at their worst in August. Since the November vaccine breakthroughs, IAG’s stock has surged by 80%, but remains 38.5% below where it started the year. 

Wilson said that while the recent rebound has effectively priced in flight routes reopening in 2021, “there could be further upside driven by on the ground improvements to travel”.

“In addition to the roll-out of vaccines, efforts by airlines like BA and airports like Heathrow to find creative solutions to ending quarantine requirements for travellers such as digital health passes will progress and make it easier for travel to take place,” he said. 

Wilson added that he does not expect the airline conglomerate’s shares to return to their pre-pandemic levels next year, as “passenger travel levels are not seen returning to 2019 numbers for some years”. 

“But a steady reopening of the economy and pent-up demand among holidaymakers to get out and travel ought to support earnings recovery in 2021,” he added, making it a good pick for balanced investors.  

Haemonetics

Braintree, Massachusetts-based Haemonetics is a global operator in blood and plasma services and supplies. Clayton said it is a fast-growing field and one in which the company has built a significant presence, operating in 16 different countries.

Haemonetics’ shares have had a relatively pedestrian year, near-halving in the savage March sell-off before going on to claw back two-thirds of those losses. They remain 16.6% down for the year but have likely been overlooked by many investors who were focusing on biotech this year.

Clayton believes the firm is well-positioned to benefit from advances in blood plasma therapies, with the stock a buy for balanced investors.

“Haemonetics leads the world in blood plasma technology and has a new generation of products that should boost profits at the same time as saving customers money,” he said.

“Looking ahead, there are over 750 new therapies that use plasma undergoing trials. As trials turn to product launches, demand looks set to grow for years to come.”

SSE

The U.K. power company, formerly known as Scottish & Southern Energy, is a good play for cautious investors, according to Mould. With stable revenue streams, it is paying a healthy 5.6% dividend with inflation-linked increases planned for the next two years.

But there could be a bit of a hidden growth story in the FTSE 100 stalwart too, he feels.

“SSE’s existing renewables portfolio and growth plans leave it well placed to be in the vanguard of the drive in the UK toward alternative sources of energy, a drive given fresh impetus by the government’s announcement in November of a multi-billion-pound green industrial revolution,” he said.

The value of SSE’s renewable assets was underlined earlier this year when the firm bagged a nice profit selling a stake in a wind project in Dogger Bank that SSE co-owns with Norway’s Equinor to Italian oil major ENI earlier this year.

“That seemed to confirm the clear upward trend in the market value of renewable assets and with oil majors potentially wading in at almost any price given their determination – and need – to reinvent themselves – SSE’s shares could yet offer greater potential for capital appreciation than many investors realise.”

James Phillipps

James Phillipps

I have been writing about wealth, the wealthy and investment for 20 years now. From how the rich amassed their fortunes to the investment strategies they employ to build and grow their assets, and what we can learn from them. But also what they spend it on, because all work and no play would be no fun. I was previously editor of Citywire Wealth Manager for eight years, where I saw first-hand both the good and bad of private client investment management. My goal is to help you identify opportunities while navigating the pitfalls. You can contact me at jamesp.freelance@gmail.com

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GenZ Investor

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The Market’s in Panic Mode.. Stock Markets Plunge 12% Amid Coronavirus Fears

Mandatory Credit: Photo by JAMES GOURLEY/EPA-EFE/Shutterstock (10584160h)
A view of digital market boards at the Australian Stock Exchange (ASX) in Sydney, Australia, 16 March 2020. The ASX dropped more than 7 percent at the opening of trade as concerns over the coronavirus and COVID-19 pandemic grow. Australian Stock Exchange (ASX) drops at opening on coronavirus concerns, Sydney, Australia – 16 Mar 2020

(Bloomberg) — The stomach-turning ride on global financial markets took a dramatic turn Monday, with U.S. stocks plunging the most since 1987 after President Donald Trump warned the economic disruption from the virus could last into summer.

The S&P 500 sank 12%, extending losses as Trump said the economy could fall into a recessoin. Equities opened sharply lower after central bank stimulus around the world failed to mollify investors worried about the damage the coronavirus is inflicting on economies.

The negative superlatives for American stocks are piling up. The S&P wiped out its gain in 2019 and is now down almost 30% from its all-time high. The Dow Jones Industrial Average lost almost 13%, falling 3,000 points to close at at two-year low. The Russell 2000 had its worst day on record, losing more than 14%.

“This is different. The thing that is scarier about it is you’ve never been in a scenario where you shut down the entire economy,” said Steve Chiavarone, a portfolio manager with Federated Investors. “You get a sense in your stomach that we don’t know how to price this and that markets could fall more.”

While the Fed cut rates toward zero and stepped up bond buying, investors continued to clamor for a massive spending package to offset the pain from closures of schools, restaurants, cinemas and sporting events. Companies around the world have scaled back activity to accommodate government demands to limit social interaction.

Here are some of Monday’s key moves across major assets:

  • All 11 groups in the S&P 500 fell, with eight of them down at least 10%.
  • The Dow Jones Industrial Average’s tumble from its record reached 30%.
  • Brent crude dipped below $30 a barrel for the first time since 2016.
  • Treasury yields retreated across the curve with moves most pronounced on the short end.
  • Shares tumbled in Asia and Europe, where the continent is now reporting more new virus cases each day than China did at its peak as more countries lock down.
  • The yen surged, the Swiss franc rallied and the dollar fluctuated.
  • Gold failed again to capitalize on the rush to havens and reversed an earlier gain to tumble.
  • Bonds declined across most of Europe, where a measure of market stress hit levels not seen since the 2011-2012 euro crisis.

The Fed and other central banks have dramatically stepped up efforts to stabilize capital markets and liquidity, yet the moves have so far failed to boost sentiment or improve the rapidly deteriorating global economic outlook. An International Monetary Fund pledge to mobilize its $1 trillion lending capacity also had little impact in markets.

The problem is, bad news keeps stacking up. The New York Fed’s regional gauge of factory activity plunged. Ryanair Holdings Plc said Monday it will ground most of its European aircraft while a consultant said the pandemic will bankrupt most airlines worldwide before June unless governments and the industry step in. Nike Inc. and Apple Inc. announced mass store closings.

“In normal circumstances, a large policy response like this would put a floor under risk assets and support a recovery,” Jason Daw, a strategist at Societe Generale SA in Singapore, wrote in a note. “However, the size of the growth shock is becoming exponential and markets are rightfully questioning what else monetary policy can do and discounting its effectiveness in mitigating coronavirus-induced downside risks.”

The yen rebounded from Friday’s plunge after the Fed and five counterparts said they would deploy foreign-exchange swap lines. Australian equities fell almost 10%, the most since 1992, even after the Reserve Bank of Australia said it stood ready to buy bonds for the first time — an announcement that sent yields tumbling. New Zealand’s currency slumped after an emergency rate cut by the country’s central bank.

Meanwhile, China reported Monday that output and retail sales tumbled in the past two months.

These are the main moves in markets:

Stocks

  • The S&P 500 fell 11.98% as of 4 p.m. in New York.
  • The Dow Jones Industrial Average plunged 12.93%
  • The Stoxx Europe 600 Index lost 4.9%, paring a drop that reached 10%.
  • The MSCI Emerging Market Index declined 6.3%.
  • The MSCI Asia Pacific Index decreased 3.7%.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%.
  • The euro gained 0.5% to $1.1162.
  • The Japanese yen strengthened 1.8% to 105.94 per dollar.

Bonds

  • The yield on two-year Treasuries sank 14 basis points to 0.35%.
  • The yield on 10-year Treasuries declined 22 basis points to 0.73%.
  • The yield on 30-year Treasuries declined 22 basis points to 1.31%.
  • Germany’s 10-year yield climbed seven basis points to -0.47%.

Commodities

  • West Texas Intermediate crude fell 9.2% to $29.05 a barrel.
  • Gold weakened 4.3% to $1,463.30 an ounce.
  • Iron ore sank 2.5% to $86.10 per metric ton.

—With assistance from Claire Ballentine, Elena Popina and Elizabeth Stanton.

By Jeremy Herron and Vildana Hajric / Bloomberg

Source: ‘The Market’s in Panic Mode.’ Stock Markets Plunge 12% Amid Coronavirus Fears

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World Stocks Follow Wall Street Lower On Renewed Virus Fears

BEIJING (AP) — Global stock markets followed Wall Street lower Friday after a spike in new virus cases in South Korea refueled investor anxiety about China’s disease outbreak.

Benchmarks in Tokyo, Hong Kong and Sydney retreated and London and Frankfurt opened lower. Shanghai advanced.

Traders shifted money into bonds and gold, a traditional safe haven.

Bond markets are “sounding a warning on global growth” as virus fears spread to South Korea, Singapore and other economies, DBS analysts said in a report.

Markets had been gaining on hopes the outbreak that began in central China might be under control following government controls that shut down much of the world’s second-largest economy. Sentiment was buoyed by stronger-than-expected U.S. economic data and rate cuts by China and other Asian central banks to blunt the economic impact.

But investors were jarred by South Korea’s report of 52 new cases of the coronavirus, raising its total to 156, most of them since Wednesday. That renewed concern the infection is spreading in South Korea, Singapore and other Asian economies.

In early trading, the FTSE 100 in London sank 0.5% to 7,402.58 and Frankfurt’s DAX lost 0.4% to 13,606.41. France’s CAC 40 tumbled 0.6% to 6,019.63.

On Wall Street, the future for the benchmark S&P 500 index retreated 0.4% and that for the Dow Jones Industrial Average lost 0.5%.

In Asia, Tokyo’s Nikkei 225 declined 0.4% to 23,386.74 and Hong Kong’s Hang Seng sank 1.1% to 27,308.81. In Seoul, the Kospi lost 1.5% to 2,162.84.

The Shanghai Composite Index bucked the regional trend, climbing 0.3% to 3,039.67.

The S&P-ASX 200 in Sydney lost 0.3% to 7,139.00. New Zealand advanced while Southeast Asian markets declined.

On Thursday, the S&P 500 index lost 0.4% after being down as much as 1.3% at one point. The Dow fell 0.4%.

Gold touched its highest price since early 2013, gaining $14.50 to $1.634.30. The 10-year Treasury’s yield sank to 1.49% from 1.57% late Wednesday.

Yields on 30-year U.S. Treasuries are below 2%, a level last seen in September “when U.S.-China trade fears were acute,” said the DBS analysts.

A pickup in economic activity “is still elusive,” despite a decline in numbers of new Chinese cases, they wrote.

China reported 118 deaths and 889 new cases in the 24 hours through midnight Thursday.

That raised the death toll to 2,236 since December and total cases to 75,465.

The number of new cases reported each day has been declining but changes in how Chinese authorities count infections have raised doubts about the true trajectory of the epidemic.

The Korea Centers for Disease Control and Prevention said 41 of the new 52 cases were in the southeastern city of Daegu and the surrounding region.

South Korea’s government declared the area a “special management zone” Friday. The mayor of Daegu urged the city’s 2.5 million people to stay home and wear masks even indoors if possible.

Also Friday, a measure of Japan’s manufacturing activity tumbled to an eight-year low and a companion gauge of service industries dropped even more sharply.

The preliminary purchasing managers’ index for February declined to 47.7 from the previous month’s 48.8 on a 100-point scale on which numbers below 50 show activity contracting. The preliminary services PMI plunged to 46.4 from January’s 51.0.

The decline “underlines that the coronavirus has started to weaken activity,” Marcel Thieliant of Capital Economics said in a report.

To contain the disease, China starting in late January cut off most access to Wuhan, the central city where the first cases occurred, and extended the Lunar New Year holiday to keep factories and offices closed and workers at home.

Some Chinese factories and other businesses are reopening but restrictions that in some areas allow only one member of a household out each day still are in place. Forecasters say auto manufacturing and other industries won’t return to normal until at least mid-March.

A rise in new cases in Beijing, the capital, “raises alarm” because it suggests major Chinese cities “may be under pressure to contain the virus amidst returning workers” as companies reopen, Mizuho Bank said in a report.

A growing number of companies say they expect to suffer losses due to the virus.

The world’s largest shipping company, Denmark’s A.P. Moller Maersk, said Thursday it expects a weak start to the year. Air France said the disease could mean a hit of up to 200 million euros ($220 million) for its results from February to April.

The worries overshadowed encouraging data on the U.S. economy.

A survey of manufacturers in the mid-Atlantic region jumped to its highest level since February 2017. A separate report showed leading economic indicators in the United States rose more in January than economists forecast. The number of workers applying for jobless claims rose but stayed low.

ENERGY: Benchmark U.S. crude lost 75 cents to $53.13 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 49 cents on Thursday to settle at $53.78. Brent crude oil, the international standard, lost 90 cents to $58.41 per barrel in London. It rose 19 cents the previous session to $59.31 per barrel.

CURRENCY: The dollar declined to 111.72 yen from Thursday’s 112.09 yen. The euro rose to $1.0815 from $1.0790.

Source: World stocks follow Wall Street lower on renewed virus fears

Subscribe: http://bit.ly/SubscribeTDAmeritrade The COVID-19 coronavirus has broken out in China. Tens of thousands have been infected, and more than a thousand have died. Airlines have canceled flights and shops have closed, but the virus is also impacting global financial markets in ways you might not expect. We dig deeper to find other ways the COVID-19 coronavirus may impact markets and considerations for hedging risk. TD Ameritrade is where smart investors get smarter. We post educational videos that bring investing and finance topics back down to earth weekly. Have a question or topic suggestion? Let us know. Connect with TD Ameritrade: Facebook: http://bit.ly/TDAmeritradeFacebook Twitter: http://bit.ly/TwitterTDAmeritrade Open an account with TD Ameritrade: http://bit.ly/SignUpTDAmeritrade

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