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Coronavirus, Foot Locker earnings: What to know in markets Friday

Heidi Chung

The coronavirus outbreak, formally known as COVID-19, will continue to dominate investors’ attention Friday. Markets around the world have been reeling as the deadly outbreak shows no signs of slowing down. It is estimated that 47 countries are affected. There are more than 87,200 reported cases and more than 2,800 deaths, as of Thursday afternoon.

Stocks got crushed again on Thursday. All three of the major indices fell more than 4% to end the trading session. The Dow (^DJI) tanked 1,193.63 points and is on pace for its worst week since October 2008, while the S&P 500 (^GSPC) sank 4.43% and the Nasdaq (^IXIC) tumbled 4.61%. Both the Dow and S&P are in correction territory, or down 10% from their most recent highs.

President Donald Trump appointed Vice President Mike Pence to lead the U.S. response to the virus. U.S. Treasury Secretary Steven Mnuchin, Director of the National Economic Council Larry Kudlow and Surgeon General of the United States Dr. Jerome Adams are a part of the president’s coronavirus task force.

The impacts have been far reaching with a slew of multinational companies warning of negative impacts to their top and bottom lines due to the prolonged and fatal virus. Economists have also issued warnings regarding GDP growth, both globally and domestically.

“We estimate that the reduced projections of growth abroad should take another 0.25%-point off our 2Q20 estimate of annualized real GDP growth, lowering it from 1.75% to 1.50%,” J.P.Morgan Chief U.S. Economist Michael Feroli wrote in a note Thursday. “The subsequent rebound of global growth should contribute positively to U.S. growth, though after rounding we leave our estimates from 3Q20 onward unchanged. We estimate. most of the drag to come through reduced exports.”

Feroli clarified that much of the revision takes into consideration the various global growth downward revisions. “We have not built in any further drag that would likely result from ‘community spreading’ of COVID-19 in the U.S. If that were to occur, the impact on growth would be difficult to quantify but almost certainly much larger than the trade-related effects we have thus far incorporated in our forecast, in our view.”

A man walks past a Foot Locker shop with sales signs in Caen, northwestern France, on January 8, 2020. (Photo by Sameer Al-DOUMY / AFP) (Photo by SAMEER AL-DOUMY/AFP via Getty Images)

Footlocker earnings

Meanwhile, Foot Locker (FL) is gearing up to report fourth-quarter financial results ahead of the opening bell. Analysts are predicting earnings of $1.58 per share on $2.25 billion in revenue, according to Bloomberg estimates.

The footwear company has been struggling recently and the performance of the company is often tied to the brands that it carries, including Nike (NKE) and Adidas (ADDYY). Given the gravity of the coronavirus outbreak around the world, Wall Street has grown increasingly cautious about consumer companies that are both exposed to China and have supply chains based in China.

In a note downgrading Nike on Wednesday, HSBC said, “We note that in the short term, [sporting goods] companies in particular face headwinds from the coronavirus outbreak on two fronts given. A significant portion of sales and profits come from mainland China and Asia, and there is a risk that part of the supply chain could be disrupted due to the challenges in mainland China right now.”

Commentary from Foot Locker’s management will be closely monitored for any color surrounding the company’s potential impact from the virus.

Shares of Foot Locker have tumbled 40% over the past 12 months and have underperformed the broader market’s 10% gain during the same time period.

Economic calendar

On the economic calendar for Friday, investors can expect the following reports: Advanced goods trade balance, January (-$68.5 billion expected, -$68.3 billion prior); Wholesale inventories, January preliminary (-0.2% prior); Personal income, January (0.3% expected, 0.2% prior); Personal spending, January (0.3% expected, 0.3% prior); PCE deflator month on month, January (0.1% expected, 0.3% prior); PCE deflator year on year, January (1.8% expected, 1.6% prior); PCE core deflator year on year, January (1.7% expected, 1.6% prior); MNI Chicago PMI, February (46.3 expected, 42.9 prior); University of Michigan Sentiment, February final (100.6 expected, 100.9 prior)

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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