Coronavirus concerns trigger broad-based (and overdue) selling
The stock market has been confronted with broad-based selling pressure to begin the week, as worries about the spread of the Wuhan coronavirus, and potential impact on economic and earnings growth, have created a basis to pull in the reins on an overextended market.
Every sector is down at this time, although the cyclical sectors are faring the worst due to the related growth concerns. Separately, travel and entertainment-related stocks, like airlines, cruise lines, casinos, and hotels, are bearing the brunt of the coronavirus concerns.
The energy sector (-2.4%) remains a leading laggard, although the most influential laggard today is the information technology sector (-2.2%), which had been this year's best-performing sector.
Entering today, the information technology sector was up 6.1% this month, so it isn't a stretch to say that it was particularly vulnerable to a sentiment-driven selloff like the one that has taken hold today. The Philadelphia Semiconductor Index is down 3.4%.
With today's move, the utilities sector (-0.3%) now occupies the top spot as best-performing sector (+5.4%) in 2020. Today's relative strength is rooted in its defensive orientation and the drop in market rates that has bolstered its income-oriented appeal. The 10-yr note yield is 1.61% versus a 3.07% dividend yield for the utilities sector.
The Russell 2000 is down 1.1%; the Dow Jones Industrial Average and S&P 500 are down 1.5%; and the Nasdaq Composite is down 1.9%.
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