Stocks decline as coronavirus keeps traders on edge

Stocks fell broadly Friday, the final day of the month, as traders tried to assess the potential economic impact of China’s fast-spreading coronavirus while weighing earnings from Caterpillar and Amazon.

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The Dow was down more than 400 points, while the S&P 500 slumped 1.2% and the Nasdaq sank 1.1%.

China’s National Health Commission confirmed on Friday that there have been 9,692 confirmed cases of the coronavirus, with 213 deaths.

The World Health Organization recognized the deadly pneumonia-like virus as a global health emergency on Thursday, citing concern that the outbreak continues to spread to other countries with weaker health systems. WHO’s designation was made to help the United Nations health agency mobilize financial and political support to contain the outbreak.

The virus, which was first discovered in the Chinese city of Wuhan, has now spread to at least 18 other countries and has dampened sentiment over global economic growth.

“The outbreak of the coronavirus has added another headwind to the near-term outlook for stocks,” said Peter Berezin, a chief global strategist at BCA Research, said in a note. “Viruses often become less lethal as they mutate because a virus that kills its host is also a virus that kills itself. Unfortunately, in a world of mass travel, a virus can spread across the globe before it has time to lose potency.”

In corporate news, Caterpillar shares fell more than 1% after the industrial giant’s CEO warned about “global economic uncertainty” in the company’s latest quarterly earnings report. Caterpillar also issued disappointing earnings guidance for 2020. Those losses were mitigated, however, by a 8.6% surge in Amazon shares.

Amazon posted a quarterly profit and revenue that easily beat analyst expectations. Amazon Web Services, the company’s cloud business, saw stronger-than-expected revenues.

Investors are nearly halfway through the corporate earnings season. More than 70% of the 226 S&P 500 companies that have reported have beaten analyst earnings expectations, FactSet data shows.

Volatile January on track for stock gains

The major averages were on pace to end the month with solid gains despite an uptick in volatility stemming from geopolitical events. The S&P 500 and Dow were both up more than 1% for January entering Friday’s session. The Nasdaq, meanwhile, was up more than 3%.

However, February has not been the market’s best month historically. Data from The Stock Trader’s Almanac shows the S&P 500 averages a gain of just 0.1%. Investors will also face a number of obstacles in the new month, including worries over how the U.S. presidential election shakes out. Coronavirus fears could also persist in February.

“That’s going to hurt China,” said Tom Martin, a senior portfolio manager at GLOBALT. “For an economy that is increasingly trying to transition to the consumer, it’s definitely a headwind.”

“When you start seeing real actions on the part of multinational companies, as well as people trying to put a number on it, it’s no longer something that is not going to have an impact at all,” Martin said.

CNBC’s Sam Meredith contributed to this report.