As the fears over the economic impact of the coronavirus slightly receded and investors rushed to buy on the previous week’s dip, between February 3 and February 7 the main US stock market indexes gained well over 2%. More specifically, the S&P 500 appreciated by 2.43%, the Dow Jones Industrial Average added 2.47% and the NASDAQ Composite grew by 2.66%.
The ongoing earnings season contributed to the overall market growth. According to FactSet, by February 7, 64% of the S&P 500 companies had posted their financial results for the last quarter. Even though 71% of these companies reported better-than-expected earnings, this figure is lower than the five-year average, FactSet noted. On the other hand, 67% of companies topped sales expectations, which is above the five-year average.
China continued to struggle with the coronavirus outbreak and the rest of the world was also slightly on edge as more cases of people infected with the virus and deaths were reported every day. In fact, the Chinese stock market lost over $400 billion on February 3, the first day it opened after an extended Lunar New Year holiday since January 23. The Chinese government tried to anticipate the panic and to prevent steep losses by cutting the fund rates by 10 basis points and by injecting $174 billion into the markets through reverse repo operations.
Nevertheless, over the course of the week, investors went into a full buying mode, encouraged by reports that the global economy is strong enough to overcome the coronavirus. The buying spree was also fueled by headlines suggesting that a treatment for the virus had been found, although there hasn’t been an official confirmation from a government or international body. Nevertheless, the uptick in stocks on the back of virus cure rumors suggests that investors are confident and just