Wall St. set to open lower on virus fears

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© Reuters. Traders work on the floor at the NYSE in New York© Reuters. Traders work on the floor at the NYSE in New York

By Sruthi Shankar

(Reuters) – U.S. stock indexes were on course to open lower on Friday, as worries over the impact of the coronavirus epidemic on global growth overshadowed the latest batch of upbeat quarterly earnings reports.

Amazon.com Inc (O:) surged 11.5% in premarket trading after it trumped Wall Street estimates for holiday-quarter results, putting the online retailer back in the $1 trillion market capitalization club.

Although corporate earnings have been largely positive so far, Wall Street indexes are on course to end the week on a poor note as virus fears continue to grip financial markets.

The World Health Organization (WHO) declared the epidemic a global emergency on Thursday after the fast-spreading virus killed more than 200 people in China and infected thousands globally.

Disruptions in supply chains and travel curbs are expected to weigh on China’s economy, prompting economists to temper their growth expectations for the world’s second-largest economy.

Fitch Solutions said it maintained its real GDP growth forecast for China at 5.9% for 2020, but said it could drop to 5.4% because of the virus.

“SARS experience suggests equities, especially in Asia, will keep falling until coronavirus infections stabilize and cyclical sectors are most vulnerable,” Citi’s global equity strategist Robert Buckland wrote in a note.

Citi, however, asked investors to “buy the dip”. “Any further drop in global equities would make forecast returns more attractive,” Buckland wrote.

Refinitiv data showed fourth-quarter earnings of 193 companies on the that have reported results through Thursday rose 0.7%, compared with a 0.6% decline estimated at the start of the season.

At 8:47 a.m. ET, <1YMcv1> were down 148 points, or 0.51%. were down 15 points, or 0.46% and were down 30.5 points, or 0.33%.

Among other stocks, Western Digital Corp (O:) jumped 5.1% after forecasting third-quarter earnings above Wall Street expectations, while International Business Machines Corp (N:) gained 4% after naming a new chief executive officer.

Caterpillar Inc (N:), a bellwether for global economic activity, slipped 1% after it forecast full-year earnings below analysts’ expectations.

Visa Inc (N:) fell 2.6% as it fell short of analysts’ estimate for first-quarter revenue and warned revenue would be crimped by incentives it provide to banking clients in 2020.

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