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S&P 500 Drops on Renewed Coronavirus Fears, Apple Revenue Downgrade

S&P 500 Drops on Renewed Coronavirus Fears, Apple Revenue Downgrade

Thomas Westwater,
What's on this page

Coronavirus Outlook Talking Points:

  • Too soon to notice coronavirus impacts
  • Apple downgrades revenue forecast
  • Economic impact likely to surpass 2003 SARS outbreak

The coronavirus remains a key theme in markets since first emerging in China’s Hubei province back in December. While most economists and other forecasters, including central banks, agree it is too early to judge the full impact, many agree there will be a hit to economic growth.

While the initial reaction to coronavirus fears was negative, US markets went on to make all-time-highs after a bout of initial volatility. However, a recent downgrade from Apple on quarterly guidance resuscitated fears surrounding the coronavirus and the tangible economic impacts resulting from its impact on the Chinese economy.

Hang Seng and S&P 500 Index

Hang Seng and SP500 Index Coronavirus

Chart created by @FxWestwater with TradingView

In line with the risk-off sentiment, commodities also reacted adversely to the coronavirus epidemic. Copper and crude oil prices sank as global growth fears rekindled, with oil dropping to the lowest level since January of last year, and copper saw a straight 12-day decline. Like equity markets, the fallout to commodities curbed into February.

Copper and Crude Oil

Commodities and coronavirus, oil, copper

Chart created by @FxWestwater with TradingView

The economic impacts from the virus are still too early to reflect in any official data. However, many forecasters are using the 2003 SARS virus to measure potential downside to the global economy. Nevertheless, the global economic landscape has morphed considerably from 2003, and China now accounts for a larger swath of global GDP.

China GDP

Source: IMF

Coronavirus Economic Impacts

Federal Reserve

The US Federal Reserve has not downgraded any official forecasts due to the coronavirus currently. However, in the semi-annual address to Congress, Chair Powell said that they will be watching closely for impacts on the US economy.

St. Louis Federal Reserve President Bullard also chimed in last week, saying that the outbreak could have effects on US interest rates until containment efforts succeed.

Corporate Earnings


On February 17th, Apple lowered its revenue guidance due to coronavirus impacts. The tech giant cited global supply issues, and reduced consumer demand in China. Apple stock responded with a near 3 percent drop at Tuesday’s opening bell.


Walmart released its 4th quarter earnings Tuesday morning. The retail chain operates over 400 stores in China, and the coronavirus was discussed by CEO Doug McMillon, who stated that it is too difficult at such an early time to predict impacts to Q1 figures from Coronavirus. Walmart stock was over one percent higher in Tuesday trading following its 4th quarter earnings report.

Market Reaction

The Apple downgrade shifted markets into a risk-off sentiment Tuesday morning with equity markets, gold, and treasury yields, all reflecting the anti-risk atmosphere . The yellow metal rose above the 1,600 level for the first time since early 2013, and the US 10-year treasury yield dropped under 1.55 percent.

US 10-Year and Gold

US 10-Year and Gold Chart Coronavirus

Chart created by @FxWestwater with TradingView


The International Monetary Fund Managing Director Chief Kristalina Georgieva expects China to respond appropriately with both fiscal and monetary measures. However, she also stated that risks remain tilted to the downside. An economic assessment on the viruses' impacts from the IMF is expected to release in the coming weeks.


OPEC slashed its 2020 demand forecast by 200,000 barrels per day to 29.30 million bpd, citing coronavirus as the main cause for the downgrade along with a weakening Euro-zone economy. Still, OPEC noted that the severity of the impact of the virus is still unknown.

S&P Global Ratings

The Chief US Economist for S&P Global expects damage to growth will be contained mainly to Q1 of this year with a smaller impact dragging onto Q2, followed by a bounce-back through the latter half of the year. Specifically, S&P expects a hit to global GDP growth of 0.3 percentage points.


Moody’s places a higher emphasis on consumer demand in China compared to the 2003 SARS outbreak, which will likely cause a more substantial economic impact. The financial services company noted increased downside risks to its 2020 GDP growth forecast of 5.8 percent. Moody’s also stated that fiscal and monetary stimulus from the Chinese government is likely.

--Written by Thomas Westwater, Intern Analyst for

Contact and follow Thomas on Twitter @FxWestwater

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.