U.S. equities finished solidly lower, posting the first weekly losses in three weeks, as angst over the continued uncertainty surrounding the impact of the coronavirus weighed on sentiment. News from the economic front didn’t help matters, as Markit’s business activity reports showed manufacturing output slowed and the key services sector fell into contraction territory for the first time in four years. The uneasiness pressured Treasury yields, the U.S. dollar and crude oil prices, while gold prices rallied on the flight to safety. In equity news, Deere & Company posted upbeat quarterly results and offered some positive commentary regarding its industry, while Dow member Coca-Cola warned of the negative impact of the coronavirus but maintained its full-year guidance. Markets in Europe and Asia also finished lower.

The Dow Jones Industrial Average decreased 228 points (0.8%) to 28,992, the S&P 500 Index tumbled 35 points (1.1%) to 3,338 and the Nasdaq Composite plunged 175 points (1.8%) to 9,577. In heavy volume, 1.1 billion shares were traded on the NYSE and 2.7 billion shares changed hands on the NASDAQ. WTI crude oil declined $0.50 to $53.38 per barrel and wholesale gasoline shed $0.02 to $1.76 per gallon. Elsewhere, the Bloomberg gold spot price rallied $24.29 to $1,643.85 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.5% to 99.33. Markets were lower for the week, as the DJIA declined 1.4%, the S&P 500 Index lost 1.2%, and the Nasdaq Composite fell 1.6%.

The preliminary Markit U.S. Manufacturing PMI Index for February declined to 50.8 from January’s unrevised 51.9 figure, below the Bloomberg consensus estimate calling for a dip to 51.5. The preliminary Markit U.S. Services PMI Index showed output for the key U.S. sector fell into contraction territory this month, dropping to 49.4 from January’s 53.4 figure, where it was forecasted to remain. A reading of 50 for both indexes is the demarcation point between expansion and contraction. Markit said although only fractional, the decrease in business activity brought to an end a near four-year sequence of expansion following a contraction in service sector output and a slower rise in manufacturing production amid supplier delays following the outbreak of coronavirus.

Existing home sales declined 1.3% month-over-month (m/m) in January to an annual rate of 5.46 million units, compared to expectations of 5.44 million units and December’s downwardly-revised 5.53 million rate. Sales of single-family homes and purchases of condominiums and co-ops both declined m/m but remained higher versus year ago levels. The median existing home price was up 6.8% from a year ago to $266,300, marking the 95th straight month of y/y gains. Unsold inventory came in at a 3.1-months pace at the current sales rate, up from the 3.0-months pace set the prior month. Significant declines in the West dragged down nationwide numbers, with the other three major U.S. regions reporting marginal-or no-changes last month. Sales were higher y/y in all regions. National Association of Realtors Chief Economist Lawrence Yun said, “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales,” adding that “Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth.”

Treasuries jumped, as the yield on the 2-year note lost 3 basis points (bps) to 1.36%, while the yields on the 10-year note and the 30-year bond were down 5 bps to 1.47% and 1.92%, respectively. Bond yields remained under pressure and gold rallied as the uncertainty regarding the economic impact of the coronavirus outbreak continued to foster a flight to safety.

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