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Stocks - Wall Street Tumbles in Early Trade as Virus Fears Revive

By Geoffrey Smith -- U.S. stocks opened lower on Thursday as market participants took money off the table in response to a sharp rise in confirmed coronavirus cases in China, which tempered earlier hopes that the disease will peak soon.

By 10:10, the Dow Jones Industrial Average was down 165 points, or 0.6%, while the S&P 500 was down 0.4% and the Nasdaq Composite was down 0.5%.

Outside of the DJIA, Tesla (NASDAQ:TSLA) stock fell 0.4%, the electric vehicle maker paring early losses after saying it wants to sell up to $2 billion in new stock via a secondary offering.

The broad risk-off move in markets followed a decision by Chinese authorities to rejig its way of counting cases of the Covid-19 virus in such a way as to correct previous under-reporting. The Communist Party also fired its top officials responsible for the city of Wuhan and the region of Hubei, the outbreak’s epicenter.

The outbreak was indirectly behind a 6.3% drop in Cisco Systems (NASDAQ:CSCO), which warned after the closing bell on Wednesday that related macroeconomic uncertainty was likely to depress investment spending by businesses. Cisco, a maker of routers and other telecoms gear, is viewed by some a good rough proxy for business investment.

Kraft Heinz (NASDAQ:KHC) stock was another big loser, the food group losing 7.9% after reporting a steeper drop in organic sales for the last quarter of 2019 than had been expected. Overall organic sales fell 2.2%, rather than the 0.9% forecast, while U.S. sales fell by an even sharper 2.7%.

Among the biggest gainers was e-commerce company Shopify (NYSE:SHOP), which shrugged off valuation-driven downgrades from Credit Suisse (SIX:CSGN) and others after soaring on the back of better-than-expected earnings on Wednesday.

Also making a big move up was insurance giant AIG (NYSE:AIG), whose core underwriting business returned to profit in the fourth quarter from a $1.1 billion loss a year earlier.

Oil and gas stocks remained under pressure after the International Energy Agency joined OPEC and the U.S. government in slashing its forecasts for global oil demand. The IEA said global demand growth would fall by 325,000 barrels a day on average this year, while demand could drop in absolute terms in the first quarter due to the Covid-19 outbreak.

Exxon Mobil (NYSE:XOM) fell 0.2%, while Marathon Oil (NYSE:MRO) - an upstream exploration and production specialist - fell 7.2% to its lowest in two and a half years.

U.S. crude futures managed a 0.6% bounce from oversold levels, while gold futures also rebounded 0.5%. The dollar index, which tracks the greenback against a basket of developed-market currencies, was flat near a four-month high of 98.930. The dollar also advanced further against emerging market currencies.

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