Stock Market News: China-Exposed Stocks Will Keep Feeling Pressure
The stock market managed to bounce back somewhat from the large drops in major benchmarks on Monday. Even though fears about the outbreak of coronavirus in the Wuhan area of China aren't diminishing much, investors seem to be more optimistic that the illness will eventually be resolved. As of 11:15 a.m. EST, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 201 points to 28,737. The S&P 500 (SNPINDEX: ^GSPC) rose 32 points to 3,275, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was higher by 111 points to 9,250.
The pressure from the coronavirus on stocks is especially evident for Chinese businesses, which are dealing with greater uncertainty than the rest of the market. That's showing up in the performance of the iShares China Large-Cap ETF (NYSEMKT: FXI). However, some stocks outside China have greater exposure to the Chinese market than you might expect, and companies like IMAX (NYSE: IMAX) could have difficulty rebounding as well.
It's not surprising to see Chinese stocks fall in light of the nation's response to the outbreak. Tens of millions of people are being told to stay home from work, with factories closed and planned celebrations for the Lunar New Year getting scaled back across the country. The government is limiting travel to try to contain the spread of the disease. Those moves will restrain economic activity across China, and the resulting weakness for the world's second-largest economy will inevitably ripple around the globe.
Source Fool.com
