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Stocks fall, bond prices rise as investors seek safe ground

NEW YORK (AP) — Stocks fell in midday trading Friday and bond prices rose as investors fretted about more signs that a viral outbreak was spreading and a report showing a sudden weakening in U.S. business activity.

Renewed anxiety over the global spread of the virus also pushed stocks lower on Thursday and knocked them off of record highs in what hasbeen a volatile, holiday-shortened week. Indexes are on track for their first weekly loss after two weeks of gains.

Technology companies led the losses. Chipmakers, whichrely heavily on China for both sales and supply chains, were some of the worst hit. Nvidia fell 3.27.

Companies thatdepend on consumer spending,especially in travel-related industries, alsofell broadly. Marriott shed 2.4% and Carnival fell 1.7%. American Airlines slipped 3.9%.

General Motors fell 2.3% and other automakers slipped as the virus hurts auto sales in China.

Investors headed for safer territory. Real estate companies and utilities held up better than the rest of the market. Bond prices rose, pushing yields lower.

The price of gold, another haven for nervous investors, jumped 1.3%.

KEEPING SCORE: The S&P 500 index fell 0.8% as of noon Eastern time. The Dow Jones Industrial Average fell 194 points, or 0.7%, to 29,038. The Nasdaq fell 1.2%. The Russell 2000 index of smaller company stocks fell 0.7%.

Asian and European markets also fell.

RUSH TO SAFETY: Treasury yields dove after a report from IHS Markit indicated U.S. business activity is contracting in February for the first time since the federal government shut down in 2013. Yields fall when prices for bonds rise, and investors are rushing for safety amid worries about how much economic damage the virus will do.

The yield on the 30-year Treasury was close to a record low at 1.92%, down from 1.98% late Thursday. The yield on the more closely followed 10-year Treasury fell to 1.47% from 1.52%. That yield, which is a benchmark for mortgages and other kinds of loans, was close to 1.90% at the start of this year.

Expectations have been building among traders that the Federal Reserve will need to cut interest rates this year to help the economy. They’re pricing in a 90% probability of at least one cut this year, up from an 85% probability a day ago and a 58% probability a month ago.

VIRUS WARNINGS: Coca-Cola is the latest big name to warn investors that the economic impact from the virus willhurt its finances. Chinais a big market for the company,and Coke now expects a hit of 2 cents per share to its first-quarter profit.

Universal Display, which makes LED-technology for televisions and other products, expects the virus to hurt orders in 2020. The International Air Transport Association said the virus threatens to erase $29 billion of this year’s revenue for global airlines, though mostly for Chinese carriers.

SPREADING ANXIETY: South Korea said 204 people have been infected with the virus, quadruple the number of cases it had two days earlier. More than 76,000 people have been infected globally, with most of the cases and deaths centered in China. That nation’s leadership on Friday shifted to a more cautious tone and said it has not yet reached a turning point for the virus and the situation in the hardest hit province remains grave.

GOOD HARVEST: Deere jumped 8.5% after the farm equipment maker handily beat Wall Street’s fiscal first-quarter profit forecasts. The company is coming out of an extended period in which it was bruised by the ongoing trade war between the U.S. and China.

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AP Business Writer Stan Choe contribued.

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