U.S. Stock ETFs Recover from Coronavirus, Mixed Earnings Selling

U.S. markets and stock ETFs recovered from their early morning stumble after mixed earnings results and updates on the coronavirus outbreak in China unsettled investors.

On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.3%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.1% and SPDR S&P 500 ETF (NYSEArca: SPY) gained 0.1%.

The markets initially sold off early morning Thursday after health officials in China quarantined millions of people in an attempt to contain the coronavirus outbreak that has claimed the lives of 18 people so far, Reuters reports.

“It feels like the coronavirus story is a convenient excuse to take a little profit, sit back and reassess,” David Lafferty, chief market strategist at Nataxis Investment Managers, told Reuters. “The indexes have become so over bought it feels like it needed a little bit of a breather and I think that’s what the coronavirus (sell-off) is really about.”

Many are worried that the outbreak is only beginning as millions of Chinese are preparing to travel ahead for the Lunar New Year holidays.

Meanwhile, a number of lackluster earnings reports also failed to get the attention of investors.

“The market is pricing a real turn in earnings for 2020,” Lafferty added. “If you tell me that companies are meeting estimates and the guidance is still positive it tells me that expectations were higher than people thought.”

Insurer Travelers and consumer-products giant Procter & Gamble held back the markets after both reporting mixed earnings results.

“Investors are looking at these earnings to get a gauge on the consumer,” Tom Martin, a senior portfolio manager at Globalt Investments, told the Wall Street Journal. “That’s really the power driver of the economy over the last year.”

So far, 74 companies in the S&P 500 have reported quarterly earnings, and 67.6% beat consensus expectations, according to Refinitiv data. Analysts expect fourth-quarter earnings to contract by 0.7% year-over-year.

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