- The Dow Jones Industrial Average (DJIA) lacked conviction during the week’s final trading session.
- U.S. consumer spending slowed significantly in January as the coronavirus epidemic began to filter into consumer behavior.
- Health officials warned Americans to brace for a U.S. outbreak, meaning coronavirus could weigh on the economy for months to come.
The Dow Jones Industrial Average (DJIA) traded with little conviction on Friday as U.S. economic data began to sense the first ripples of the coronavirus outbreak.
Consumer spending slowed significantly in January as Americans began to alter their behavior in response to the first coronavirus headlines.
With the number of confirmed cases nearing , (and the Centers for Disease Control and Prevention ( CDC) warning about a US coronavirus outbreak , ING Chief International Economist James Knightley fears that the epidemic could pummel the “linchpin” of the U.S. economy.
He wrote in the bank’s February economic update:
The greater concern will be what might happen if the virus is not contained and the number of US cases start to rise. We would likely see increased health warnings, which could start to impact both consumer and corporate behavior. Consumer spending contributes nearly % of US GDP, which is greater than other developed market economies, so a shock here would have major ramifications for growth.
Dow Seesaws to End the Week
Following a tepid day for the stock market yesterday, the Dow Jones Industrial Average seesawed between gains and losses on Friday.
As of 9: am ET, the Dow had lost points or 0. (% to dip to) , . .
, and the sector’s resilience fortified GDP growth throughout the trade war.
But maybe not for much longer.
David Rosenberg, the chief economist and strategist of Rosenberg Research and Associates, said that today’s retail sales data gave the “resilient consumer” narrative a “kick in the gut.”
, but just have been identified in the United States. CDC officials have warned the virus will likely “ find a foothold ”in the US and“ be with us beyond this season, beyond this year. ”
So while the “resilient consumer” protected the economy against the negative impacts of the trade war in 233862, ING’s James Knightley says this sector is the one “most vulnerable” to the coronavirus outbreak in 233858.
Spending on consumer services would be most vulnerable to such a situation as that is more likely to involve human contact that consumers may become more nervous to experience.
Major stock indices are still ranging near all-time highs, so it doesn’t look like Wall Street has priced these risks into the market.
But if subsequent data releases continue to show coronavirus-related weakness, investors might be left with no choice but to reconsider their bullish growth outlooks.
ING has already trimmed its GDP forecast to 1.5%.
This article was edited by Sam Bourgi
(Last modified: February) , (2:) (PM UTC)
GIPHY App Key not set. Please check settings