Markets are putting pressure on the Federal Reserve for at least one rate cut

Traders work on the floor at the New York Stock Exchange, January 14, 2020.

Brendan McDermid | Reuters

Federal Reserve officials this week affirmed their commitment to staying put on interest rates for the time being, but markets have other ideas.

The fed funds futures market, where traders go to bet on the central bank’s policy direction, is pricing in about a 58% chance of a rate cut by June, according to the CME’s FedWatch tool. Traders are even making room for two cuts, assigning a nearly 60% chance of another move lower in December.

Expectations for an easing have accelerated as the coronavirus has begun to spread globally and threatens to dent China’s already decelerating growth. Stocks have surrendered their January gains and bonds are again flashing a recession signal through an inverted yield curve.

Markets, then, might be bracing against the chance of a contagion both medically and economically.

“The Fed won’t divorce itself from the human aspect of this. But it will be about growth and whether or not this affects growth,” said Quincy Krosby, chief market strategist at Prudential Financial. “China is the second-largest economy in the world. If demand in China slows, it’s going to affect some of the larger trading partners. It won’t just be the U.S. That could stymie attempts of monetary and fiscal stimulus to bolster global growth.”

‘Wait and see’

Central bankers tend to look through events like natural disasters and the spread of infectious disease as one-off events unlikely to figure into the longer-term picture and thus move interest rates.

But Fed Chairman Jerome Powell did acknowledge the coronoavirus this week, and it’s like to come up once officials resume making position speeches now that the January meeting is past.

“The situation is really in its early stages and it’s very uncertain about how far it will spread and what the macroeconomic effects will be in China and its immediate trading partners and neighbors and around the world,” Powell said at his post-meeting news conference Wednesday. “So in light of that uncertainty, I’m not going to speculate about it at this point. I would just tell you that, of course, we are very carefully monitoring the situation.”

He added that future policy decisions are dependent on “the potential ramifications for the U.S. economy and for the achievement of our dual mandate” of full employment and price stability.

The Fed already is in an accommodative posture coming off a 2019 where it cuts its benchmark borrowing rate three times by a total of 75 basis points. A statement the policymakers released upped the central bank’s commitment to boosting the inflation rate to 2%, which it considers healthy for a growing economy.

However, some officials have expressed unease with having rates so close to zero and the limited room that would provide in an economic downturn.

So a cut from here likely wouldn’t come unless the coronavirus presented a longer-term threat to global and U.S. growth.

“If you’re sitting at the Fed, you’re obviously worried about these global risks. But you kind of just sit and wait,” said Jospeh LaVorgana, chief Americas economist at Natixis. “I’d be more comfortable with them keeping the accommodation going through the balance sheet” expansion rather than rate cuts.

Markets, though, are clearly nervous.

Major averages Friday suffered through their worst day since October as the Dow Jones Industrial Average had shed more than 500 points heading into the last hour of trading. The Fed doesn’t directly respond to market tumult, but is no doubt watching what happens.

“What this coronavirus has done now is allow the market to be that much more worried about an inflection in the economy,” LaVorgna said. “The smart move is the Fed should continue to expand the balance sheet and continue to talk dovish, and then take a wait and see attitude.”

Trump curbs immigration for 6 nations in election-year push

President Donald speaks during summit on combating human trafficking in the East Room of the White House in Washington, DC on January 31, 2020.

Andrew Caballero-Reynolds | AFP | Getty Images

The Trump administration announced Friday that it was curbing legal immigration from six additional countries that officials said did not meet security standards, as part of an election-year push to further restrict immigration.

Officials said immigrants from Kyrgyzstan, Myanmar, Eritrea, Nigeria, Sudan and Tanzania will face new restrictions in obtaining certain visas to come to the United States. But it is not a total travel ban, unlike President Donald Trump’s earlier effort that generated outrage around the world for unfairly targeting Muslims.

Trump was expected to sign a proclamation on the restrictions as early as Friday.

The announcement comes as President Donald Trump tries to promote his administration’s crackdown on immigration, highlighting a signature issue that motivated his supporters in 2016 and hoping it has the same affect this November. The administration recently announced a crackdown on birth tourism and is noting the sharp decline in crossings at the U.S.-Mexico border and citing progress on building the border wall.

Immigrant visas were restricted for Kyrgyzstan, Myanmar, Eritrea, Nigeria, and are given to people seeking to live in the U.S. permanently. They include visas for people sponsored by family members or employers as well as the diversity visa program that made up to 55,000 visas available in the most recent lottery. In December, for example, 40,666 immigrant visas were granted world-wide.

Sudan and Tanzania have diversity visas suspended. The State Department uses a computer drawing to select people from around the world for up to 55,000 diversity visas.

Nonimmigrant visas were not affected. Those are given to people traveling to the U.S. for a temporary stay. They include visas for tourists, those doing business or people seeking medical treatment. During December, for example, about 650,760 nonimmigrant visas were granted world-wide.

Wolf said Homeland Security officials would work with the countries on bolstering their security requirements to help them work to get off the list.

“These countries for the most part want to be helpful, they want to do the right thing, they have relationships with the U.S., but for a variety of different reasons failed to meet those minimum requirements,” said acting Homeland Security Secretary Chad Wolf.

Rumors swirled for weeks about a potential new ban, and initially Belarus was considered. But Secretary of State Mike Pompeo was headed to the Eastern European nation as the restrictions were released and Belarus was not on the list. Wolf said some nations were able to comply with the new standards in time.

The current restrictions follow Trump’s travel ban, which the Supreme Court upheld as lawful in 2018. They are significantly softer than Trump’s initial ban, which had suspended travel from Iraq, Iran, Libya, Somalia, Sudan, and Yemen for 90 days, blocked refugee admissions for 120 days, and suspended travel from Syria. The government suspended most immigrant and nonimmigrant visas to applicants from those countries. Exceptions are available for students and those with “significant contacts” in the U.S.

Trump has said a travel ban is necessary to protect Americans. But opponents have argued that he seeks to target Muslim countries, pointing to comments he made as a candidate in 2015 calling for a “total and complete shutdown of Muslims entering the United States until our country’s representatives can figure out what is going on.”

The seven countries with considerably more restrictions include nations with littler or no diplomatic relationship to the U.S. They include five majority-Muslim nations: Iran, Libya, Somalia, Syria, and Yemen.

Sudan and Kyrgyzstan are majority-Muslim countries. Nigeria is about evenly split between Christians and Muslims but has the world’s fifth-largest population of Muslims, according to the Pew Research Center.

Wolf said immigrant visas were chosen because people with those visa are the most difficult to remove after arriving in the United States.

The initial ban was immediately blocked by the courts and led to a monthslong process to develop clear standards and federal review processes to try to withstand legal muster.

The announcement of new countries banned was expected leading up to the third anniversary of the Jan. 27, 2017, enactment of the first order.

Wolf said officials spent about six months working on revised criteria. They examined countries for compliance with minimum standards for identification and information-sharing, and assessed whether countries properly tracked terrorism or public safety risks. Officials looked at whether countries used modern passports, shared information that the U.S. could validate on travelers and identified possible criminal suspects in a way that the U.S. could see before entry. They evaluated responses and ranked nations on where they fell.

Government agencies then discussed whether countries had different, but important, contacts with the U.S. and then decided on restrictions.

“Really the only way to mitigate the risk is to impose these travel restrictions,” Wolf said.

Friday’s massive sell-off ruins ‘January barometer’ market signal

The stock sell-off deepened on the last day of January on concerns that the deadly coronavirus will disrupt the global economy, and in the process ruined an old market indicator that was signaling a positive year.

As goes January, so goes the year — this Wall Street saying from the widely watched “January barometer” suggests a correlation between January’s performance and full-year returns.

Going back to 1950, when the S&P 500 was positive in January, 86% of the time the full year turned out to be up with only 10 major errors through 2019, according to the Stock Trader’s Almanac, which identified the seasonal signal.

The track record is even better in presidential election years. Since 1928, when January is up in an election year, the year is up 100% of the time with an average S&P 500 return of 16.6%, according to Bank of America.

Friday’s losses erased all the earlier gains in January for the S&P 500, with the index now down 0.4% on the month. The Dow Jones Industrial Average has turned also red for January, down more than 1%. Perhaps the indicator now is signaling a volatile year we may have ahead.

Investors were caught off guard in the middle of January when the coronavirus spread from China to the U.S., causing a broad sell-off in risk assets. Now, the number of confirmed coronavirus cases have risen to 9,782 in mainland China, bringing the global total to almost 10,000 cases with at least 213 deaths. Major U.S. airlines also announced plans to suspend their already reduced service to China.

“Uncertainty is never great for stocks, but when it involves the lives of many, many people, it’s impossible to know just what kind of problems this uncertainty will eventually create,” Matt Maley, chief market strategist at Miller Tabak, said in a note.

The late-month sell-off may portend more trouble ahead for the year. On the politics front, the stock market has started to worry about Bernie Sanders gaining momentum in the presidential pool. “Bond King” Jeffrey Gundlach labeled Sanders a “scare,” warning investors that the biggest risk to the markets in 2020 is the Vermont senator becoming “more believed in as a real force.”

“Elevated policy uncertainty usually leads to lower equity valuations and higher implied volatility in the months ahead of Election Day,” Ben Snider, Goldman Sachs equity strategist, said in a note. “The wide range of the various candidates’ policy views and the narrow range of polling and prediction market data indicate a particularly uncertain environment this year.”

— CNBC’s Nate Rattner contributed to this report.

Trump Mar-a-Lago security breach, shots fired, police say

Mar-a-Lago Resort

Joe Raedle | Getty Images

Law enforcement officials fired shots at a vehicle that breached two security checkpoints Friday at President Donald Trump’s Mar-a-Lago resort in Florida, police said.

Two people were taken into custody after the incident at the Palm Beach resort, which Trump is scheduled to visit later Friday, police said.

The Palm Beach County Sheriff’s Office said in a statement that officers from the Florida Highway Patrol had been pursuing a black SUV that was headed toward checkpoints at Mar-a-Lago at around 11:40 a.m. ET.

“The SUV breached both security check points heading towards the main entrance,” the sheriff’s office said.

“Officials … discharged their firearms at the vehicle.”

The SUV then fled, while being chased by the highway patrol and by a sheriff’s office helicopter.

The vehicle was later located, and two people were taken into custody.

Officials have scheduled a news conference for 3 p.m. ET.

The White House and Mar-a-Lago did not immediately respond to a request for comment.

This is the second security breach at Mar-a-Lago this month.

On Jan. 6, police an unspecified incident was reported at the resort.

Palm Beach police opened an investigation, according to the Miami Herald. Police said at the time that the Secret Service was leading the investigation and there had been no arrests.

In November, Chinese businesswoman Yujing Zhang was sentenced to eight months in jail after being convicted of trespassing at Mar-a-Lago.

Zhang on March 30 had passed by at least five Secret Service agents and into the main reception area of Mar-a-Lago before she was intercepted by officers, according to a criminal complaint.

After she was detained, Zhang was found at the resort carrying four mobile phones, a laptop computer, an external hard drive, and a thumb drive that “contained malicious software,” the complaint said.

At the time of the incident, Trump was playing golf at the Trump International course nearby.

A federal judge ordered her to be deported after serving her sentence.

A second Chinese woman, Lu Jing, was arrested in December for allegedly trespassing at Mar-a-Lago and refusing to leave, Palm Beach police said.

Trump was not at the resort at the time.

Read more: Secret Service reportedly conducting investigation at Trump’s Mar-a-Lago following incident

This is breaking news. Please check back for updates.

Senators to hold key vote with the end in sight

Senators are set to vote Friday on whether to include new witnesses and documents in President Donald Trump’s impeachment trial, a pivotal moment in the proceedings that could pave the way for Trump’s acquittal.

Democrats, led by Senate Minority Leader Chuck Schumer of New York and House impeachment manager Rep. Adam Schiff of California have fought tooth and nail to convince the Republican-led chamber to vote to hear from key witnesses who did not testify in the House.

But after more than a week of trading barbs with Trump’s defense team on the Senate floor, it appears unlikely that the Democrats will secure the 51 votes required to pass a rule that would introduce new witnesses and documents.

If the rule were to pass, Democrats would almost certainly seek to compel testimony from acting White House chief of staff Mick Mulvaney, and from John Bolton, Trump’s former national security advisor.

Bolton reportedly wrote in his forthcoming memoir that Trump told him last summer that he intended to withhold nearly $400 million in U.S. foreign aid to Ukraine until Kyiv agreed to announce investigations into the president’s political opponents. The House voted to impeach Trump in December on two articles, abuse of power and obstruction of Congress, both stemming from Trump’s handling of the U.S. relationship with Ukraine.

Democrats see both of these witnesses as crucial to successfully proving the two main allegations contained in the impeachment articles. Without them, Democrats see little chance of ever overcoming the wave of Republican opposition to convicting Trump and removing him from office. Trump has denied any wrongdoing.

A victory in Friday’s vote appeared to slip further away from Democrats late Thursday night, after a key Republican senator announced that he would oppose any attempts to introduce new evidence at the trial.

In a statement, GOP Sen. Lamar Alexander of Tennessee said that although he believed the president had indeed solicited foreign assistance from Ukraine in his reelection bid, Trump’s behavior did not meet the standard for impeachment. As such, Alexander said he didn’t see the need for further evidence.

Another Republican, Sen. Susan Collins of Maine said Thursday that she planned to break with her party and vote for additional witnesses. On Friday morning, an aide to Sen. Mitt Romney, R-Utah, also confirmed that he would vote with the Democrats.

Republicans hold a 53-47 majority in the Senate, meaning at least four GOP senators will have to break with their party and vote for a resolution to admit additional witnesses and documents into the trial.

Collins and Romney had already been factored into Democrats’ planning for the vote, however, and they remained two Republican votes short of a majority as of late Friday morning.

This next phase of Trump’s impeachment trial gets underway Friday at 1 p.m. ET, with up to four hours of equally divided time allotted for senators to debate, before votes are called on amendments, including whether or not to subpoena witnesses and additional documents. Senators in each party are not required to use up their entire two hours, so the timing of Friday’s votes will remain fluid throughout the afternoon.

If the proposal to admit new witnesses doesn’t pass, which looks increasingly likely, then Senate Majority Leader Mitch McConnell could decide to proceed to a final vote on whether to convict or acquit the president as early as Friday evening. The trial schedule is complicated by two major events early next week: The 2020 Iowa caucuses on Monday, and the president’s State of the Union address on Tuesday night.

McConnell has made no secret of his desire to conclude the Senate trial as soon as he can. But the Iowa caucuses and the State of the Union mean that if a Friday vote on acquittal isn’t feasible, the vote would need to be delayed until Wednesday. For the president, this would mean that he had to deliver his State of the Union address under a cloud of impeachment, and not under the glow of acquittal, as he would if the Senate voted before his speech.

As McConnell arrived at the Capitol on Friday morning, he declined to specify how he thought the day would progress. “I think we can all agree this is a big day,” McConnell said.

Dow drops 450, Amazon up 9% to $1 trillion, coronavirus fears weigh

Jeff Bezos, founder and CEO of Amazon, pictured on September 13, 2018.

Bloomberg | Getty Images

This is a live blog. Check back for updates.

12:03 pm: Markets at midday: Stocks plunge as airlines curb US-China flights, S&P 500 down 1%

Stocks were down sharply in midday trading, with the S&P 500 and Dow dropping more than 1% each. The sell-off accelerated in midmorning after Delta and American Airlines announced they had suspended flights between China and the U.S. due to the coronavirus. The Dow also erased its gains for the month. Delta and American shares both fell more than 2%. Wynn Resorts and Las Vegas Sands dropped more than 1% each. —Imbert

12:02 pm: Longtime bull Tom Lee advises against buying this dip

This week’s market sell-off has sent one of the Wall Street’s biggest optimists heading in the other direction, at least for now. Perennial bull Tom Lee, head of research at Fundstrat Global Advisors, told clients that he doesn’t advise buying this dip, which has seen the market erase about all of its January gains. Lee said that “this does not feel like a reflexive 2%-3% drawdown that ‘needs to be bought’ but rather, this feels like the start of a broader correction. Hence, the character of the market is changing from the relentless buying since October, to one where we need to ‘wait for the initial bottom’ before becoming more aggressive.” Lee estimates the selling will stop somewhere between the S&P 500’s 100- and 200-day moving averages, respectively 3,111 and 3,011. Those two points represent respective drawdowns of 5% and 8% from Thursday’s close. Still, Lee said he remains bullish for the full year because of “economic tailwinds” that ultimately will push the market higher. – Cox

12 pm: Gold eyes its best month in five as investors rush for safe haven during virus uncertainty

Gold prices have gained about 4% in January and are headed for its best month in five as concerns about an economic slowdown from the Chinese coronavirus pushed investors into the safe haven asset. The World Health Organization on Thursday declared the coronavirus outbreak a global emergency, causing Wall Street firms like Goldman Sachs to downgrade this quarter’s growth forecast. Spot gold rose 0.65% to $1,584.1 per ounce on Friday. —Fitzgerald

11:43 am: Short seller Carson Block Takes Aim at Luckin

China-based Luckin Coffee plunged 14% in midday trading after Muddy Waters Research tweeted it’s betting against the stock in light of what it described as fraud and a “fundamentally broken business.” Noted short seller Carson Block, founder and manager of Muddy Waters, is known for turning profits by leveraging his aptitude for detecting underhanded business practices, especially in China. His firm rose to fame in 2011 after Muddy Waters accused Chinese forestry company Sino-Forest of fraud. The company filed for bankruptcy the following year. —Franck

11:34 am: Dow technical breakdown

The Dow crossed below its 50-day moving average, a technical level closely watched by traders, for the first time since Oct. 10th. —Francolla

Source: FactSet

11:07 am: Dow now down 400 points

The Dow is now down 400 points as investors start to worry about the financial impact of the coronavirus if travel to China is severely restricted in the first quarter. Apple is down more than 2%. -Melloy

10:53 am: Coronavirus-related names tank as airlines cancel flights

Stocks with exposure to China travel continued to fall on Friday as the deadly coronavirus infection and death toll rise. Airlines got hammered after Delta and America Airlines said they are suspended all flights between the U.S. and China. Shares of Delta are down 1.5% Friday and down nearly 4% for the month. American Airlines dropped 3% and is down more than 6% this month and United Airlines ticked 2.4% lower, continuing its near 14% drop since the start of January. Southwest fell 1.4%. Casino companies that operate in Macao also fell on Friday. Las Vegas Sands fell 2%, MGM Resorts ticked 1.6% lower and Wynn Resorts dropped 1.4%. The companies are down 6%, 7.5% and 10%, respectively this month. Cruise lines also got hammered with Carnival down 1.4%, Norwegian Cruise Lines down 1.7% and Royal Caribbean Cruises down 1.3%. Cruise lines are continuing their declines for the month down 13%, 7% and 11%, respectively, this month. – Fitzgerald

10:47 am: Market hits session lows as airlines suspend service to China

The Dow fell to its low for the day after American Airlines joined Delta in suspending all U.S.-China flights due to the coronavirus. -Melloy

10:18 am: Dow turns red for January

As the losses on Friday mount, the Dow has turned negative for January. With it down more than 1.1%, the average is now slightly in the red for the month. The S&P 500 is still up 0.8% for the month and year. – Melloy

10:10 am: IBM shares jump on CEO shuffle

Shares of IBM jumped more than 4% after the computer software company announced CEO Ginni Rometty will step down in April. Rometty, who has served at the helm of the company since 2012, will be replaced by Arvind Krishna. Shares of IBM are down more than 22% since Rometty became CEO; however, the company shifted the focus of its business to could services in that time. Krishna, 57, is one of IBM’s top executives, having joined the company in 1990. —Fitzgerald

10:08 am: Sell-off accelerating in morning trading

The Dow is now down 300 points, with Chevron and Exxon Mobil leading the decline in the 30-stock average. Apple dropped 2%, weighing on the broad market.— Li

10:03 am: Consumer sentiment comes in slightly better than expected

January’s consumer sentiment data from the University of Michigan’s Surveys of Consumers were stronger than estimated. The number came in at 99.8, up from 99.3 in December and topping Dow Jones’ expectations of 99.1. Stocks remained lower after the data release.— Li

9:54 am: Lots of red on the board

Just five of the 30 Dow members are higher with IBM the highlight, up nearly 4%. Chevron is the worst performer, down more than 3%. Decliners are outpacing advancers on the Big Board by 2.5-to-1. — Melloy

9:50 am: 10-year Treasury yield on track for its biggest monthly drop since August

The yield on the benchmark 10-year Treasury note fell to about 1.534% Friday, bringing its month-to-date decline to nearly 40 basis points, on pace for its biggest monthly plunge in five months. The 10-year yield also dipped below the three-month Treasury rate of 1.552%, inverting a key part of the yield curve. This part of the yield curve is closely watched by the Federal Reserve for signs of an economic downturn.— Li

9:38 am: Goldman says coronavirus could dent growth this quarter

The Chinese coronavirus that has infected about 10,000 people and killed more than 200 people worldwide, is expected to dent economic growth this quarter, according to Goldman Sachs. The investment bank said the spreading virus could take 0.4% out of the annualized growth rate in the first quarter. The virus, which the World Health Organization declared a global emergency on Thursday, is causing consumers to stay inside, businesses to close shops, and airlines to cancel flights. Overall, Goldman said it expects the virus to result in “only a small net drag” on U.S. full-year 2020 growth of roughly 0.05 percentage points. —Fitzgerald

9:33 am: Dow drops at open, barely higher for January

The Dow Jones Industrial Average dropped about 200 points shortly after the open Friday and the S&P 500 lost 0.3%. The Dow is up just 0.4% for January, while the S&P 500 is up 1.3%. The Nasdaq Composite Index was the bright spot, clinging to the flat-line on Friday because of a 9% surge in Amazon, which brought its market value back above $1 trillion. –Melloy

9:23 am: Coronavirus projected to hit China economy even harder

The coronavirus pandemic could hit the already slowing China economy even harder, according to Citigroup. The firm cut its GDP estimate for this year, now expecting a growth rate of 5.5% compared to the previous outlook for 5.8%. “We expect the negative economic impact of 2019-nCoV to concentrate in the near term, before the virus is contained and the government starts to repair the economy,” economist Xiangrong Yu said. GDP is projected to dip as low as 4.8% in the first quarter then rebound as the damage from the virus ebbs. —Cox

9:05 am: Biggest analyst calls of day

  • Evercore ISI downgraded World Wrestling Entertainment to in line from outperform.
  • JPMorgan initiated Uber as overweight. (stock up 0.7%)
  • Guggenheim upgraded PayPal to buy from neutral.
  • Baird downgraded Amgen to underperform to neutral. (stock down 2.7%)
  • Wells Fargo downgraded Sherwin-Williams to equal weight from overweight.
  • Jefferies upgraded Deckers to buy from hold. (stock up 5%)

CNBC Pro subscribers can read more here. —Bloom

9:02 am: WWE stock takes a beating

Shares of Word Wrestling Entertainment fell about 25% in premarket trading after the company announced that co-Presidents George Barrios and Michelle Wilson will immediately leave the company and vacate their board seats. Additionally, WWE lowered its full year 2019 forecast to the bottom of the range of its previous guidance, below Wall Street’s consensus according to FactSet. —Sheetz

8:58 am: Colgate-Palmolive rises after solid earnings

Shares of Colgate-Palmolive rose nearly 5% in premarket trading after the company reported fourth-quarter earnings in-line with expectations, with revenue slightly above as well, according to FactSet. The consumer products company also forecast 2020 revenue would growth between 4% and 6%, above the 3.8% pace analysts expected. —Sheetz

8:39 am: Canaccord says market is ‘uncomfortably neutral’

Canaccord Genuity writes that the U.S. equity market is “uncomfortably neutral:” It’s caught between positives like stronger fourth-quarter earnings and an easy Fed in tandem with negatives like an unknown macro impact from the coronavirus and a surge in valuations over the last month. Chief Market Strategist Tony Dwyer writes the opposing forces make it hard to be too bearish and too bullish, forcing investors into a charged equilibrium. The brokerage downgraded its market view to neutral on Jan. 20 because of “the overbought conditions and excessive optimism.” —Franck

8:35 am: Caterpillar shares fall after a revenue miss, warning of ‘global economic uncertainty’

8:28 am: Amazon headed back to the $1 trillion club

Amazon shares surged more than 10% in the premarket on the back of quarterly numbers that blew past analyst expectations. The company posted a profit of $6.47 per share on revenue of $87.44 billion. Analysts polled by Refinitiv expected earnings per share of $4.03 on revenue of $86.02 billion. Revenue from the cloud business were a key driver for Amazon. “AMZN mgmt checked all the boxes with its Q4’19 EPS report,” said UBS analyst Eric Sheridan. “In addition, against that backdrop, AMZN mgmt in no way left investors with the view that their global agenda to drive better performance for platform partners … still has a long runway ahead.” Friday’s surge would bring Amazon’s market cap back above $1 trillion, based on the share count from the company’s October 10-Q filing. Alphabet, Microsoft and Apple also have market caps of more than $1 trillion. —Imbert

8:24 am: Dow set to drop more than 100 points on coronavirus fears, Caterpillar warning

U.S. stocks were headed for a mixed open on the last day of January as worries over the coronavirus lingered while Caterpillar raised a red flag about the global economy. Dow Jones Industrial Average futures pointed to a drop or more than 100 points at the open. Chinese authorities said the number of coronavirus deaths has risen above 200 while more than 9,000 cases have been confirmed. Caterpillar also contributed to the losses in Dow futures after its CEO warned about “global economic uncertainty” (see below). Amazon shares surged more than 10%, however, to curb some of those losses. In fact, those gains pushed the Nasdaq 100’s implied open higher. —Imbert

—With reporting by Michael Sheetz, Michael Bloom, Tom Franck, Jeff Cox, John Melloy, Maggie Fitzgerald, Gina Francolla.

Dow drops 350 points as airlines suspend service to China due to coronavirus

Stocks fell broadly on Friday, wiping out the Dow Jones Industrial Average’s gain for January, as investors grew increasingly worried about the potential economic impact of China’s fast-spreading coronavirus.

The Dow dropped 350 points, or 1.2%, falling to its low of the session after Delta and American suspended all flights between China and the U.S. The S&P 500 was down 1% while the Nasdaq Composite dipped 0.9%. 

The major averages slid even as Amazon surged 9% to a $1 trillion market value, joining an elite club shared only by Apple, Microsoft and Alphabet. 

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 (WHO) 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, 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.”

Police officers in plainclothes raid a medical supply shop for allegedly hoarding and overpricing face masks, as public fear over China’s Wuhan Coronavirus grows, on January 31, 2020 in Manila, Philippines.

Ezra Acayan | Getty Images

Las Vegas Sands and Wynn Resorts, two stocks that are coronavirus proxies given their gaming exposure in China, fell more than 1.5% each. Airline stocks such as American and United dropped more than 2.5% each while Delta slid 1.6%.

In corporate news, Caterpillar shares fell 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

The major averages saw an uptick in volatility this month as investors grappled with rising tensions between Iran and the U.S., trade worries with China and the recent coronavirus scare. 

Still, the S&P 500 was on pace for its fifth straight monthly gain, gaining 0.9% in January. The Nasdaq is up 3.1% and is also on track for a five-month winning streak. The Dow, however, was headed for its first monthly loss since August. 

The Cboe Volatility Index (VIX), widely considered to be the best fear gauge in the market, rose to above 18 this month from 13.78, a gain of more than 30%.

Stocks could face some seasonal headwinds next month. 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, 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.

FBI warns of new online threat to personal, credit card info

Federal authorities have a consumer warning for shoppers. Hidden skimming devices (commonly thought to be attached to gas station pumps and ATMs) have gone high-tech.

“It’s hard to put really — definite numbers around it. But one thing we know for sure is that millions of credit card numbers have been stolen, even over the course of the past two years,” Herb Stapleton, section chief for the FBI’s cyber division told CNBC.

This new type of skimming is called e-skimming or Magecart.

Cybercriminals can gain access to your personal and credit card information in a number of ways. They can break into a web server directly or break into a common server that supports many online shopping websites to compromise them all and once a site has been compromised, the shopper can’t spot the difference.

“It’s nearly impossible for a consumer to detect that this has happened to them before the actual occurrence. The site that they would look at, which is already infected, would look no different to a consumer,” Stapleton said.

Randy Pargman is the senior director for threat hunting and counterintelligence at Binary Defense, an Ohio-based cybersecurity company that monitors companies’ computers for signs of attacks.

The company won’t disclose its clients but says many are in the retail sector.

Victims of e-skimming include Macy’s, Puma’s Australian website, Ticketmaster’s United Kingdom website and British Airways. The companies did not respond to requests for comment.

“Any retailer that has a significant online presence that accepts online orders is definitely concerned about e-skimming,” Pargman said.

For consumers, there are several things you can do to protect yourself when shopping online.

1. Always shop with a credit card instead of a debit card online. This lessons the inconvenience if your card is compromised, Pargman said. Credit card users usually have a lower liability for fraud. In addition, getting money returned to your debit card can take some time.

2. Consider asking your bank or credit card company for a virtual credit card. Not all banks offer it but many do. The virtual credit card is a unique credit card number to be used for specific transactions and for a specific merchant. If this number is compromised, other charges will be declined.

3. Monitor their cards for any unusual activity and report it right away.

While the FBI’s Stapleton said e-skimming has been on its radar for nearly seven years, he said the crimes are growing because cybercriminals are sharing the malware online and becoming more sophisticated.

“If we put up a wall,” Stapleton said, “they’re building a ladder or a tunnel or a way to go around it.”

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Exxon Mobil (XOM) Q4 2019 miss estimates

Exxon earned $5.69 billion in the fourth quarter, down from $6 billion in the same period a year ago as lower oil prices continue to pressure profits.

The company’s quarter was boosted by one-time events, including a $3.7 billion gain from Exxon’s Norway divestment. Excluding these items, profit for the quarter missed analyst estimates by 2 cents per share.

Here’s how the energy giant’s results fared relative to Wall Street expectations:

  • Adjusted earnings: 41 cents per share vs. 43 cents per share expected by Refinitiv
  • Revenue: $67.17 billion, versus $64.166 billion expected by Refinitiv
  • Upstream income: $2.19 billion vs. $2.44 billion expected by FactSet
  • Downstream income: $898 million vs. $457.2 million expected by FactSet
  • Chemicals income: $355 million loss vs. $174.6 million loss expected by FactSet

Oil-equivalent production was 4 million barrels per day, which was in-line with the same quarter a year earlier. Production in the oil-rich Permian spiked 54% year-over-year, and during the fourth quarter production began in the company’s offshore Guyana operations. The company said that capital and exploration expenditures grew 8% year-over-year to $8.46 billion.

The stock fell 1% during pre-market trading.

The company completed the sale of its upstream assets in Norway, which added $3.7 billion to earnings, and is part of the company’s plan to divest around $15 billion worth of non-strategic assets by 2021.

“Our operations performed well, while short-term supply length in the downstream and chemicals businesses impacted margins and financial results,” Darren Woods, chairman and chief executive officer, said. “Growth in demand for the products that underpin our businesses remains strong. We remain focused on improving our base businesses, driving efficiencies, and optimizing the value of our investment portfolio.”

Last quarter the company reported earnings of 75 cents per share on revenue of $65.05 billion, and in the same quarter a year earlier the company reported earnings per share of $1.41 and revenue of $71.90 billion.

On Thursday shares of Exxon sank to their lowest level since Oct. 2010 as declining oil prices have continued to hit the company’s operations.

Caterpillar earnings come in at $2.63, vs $2.37 EPS expected

Shares of Caterpillar fell on Friday after reporting a revenue miss in the fourth quarter, citing “global economic uncertainty.”

Industrial giant’s quarterly earnings came in at $2.63 per share adjusted, compared to an estimate of $2.37 per Refinitiv. However, its revenue fell 8% year-over year to $13.144 billion, below the estimate of $13.412 billion. CEO and chairman Jim Umpleby noted persisting risks around the world that weighed on the company’s revenue. 

“We expect continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories,” Umpleby said in a statement. “We have improved our lead times and remain prepared to respond quickly to any positive or negative changes in customer demand.”

Caterpillar also issued weaker-than expected guidance for full-year 2020, expecting an EPS of $8.5 to $10 compared to $10.63 that the Street was looking for.

The heavy machinery manufacturer’s stock dipped more than 1% in premarket trading Friday. Caterpillar shares have fallen nearly 10% in January alone, following a 16% gain last year.

At the height of the U.S.-China trade war last year, Caterpillar’s profits took a big hit from higher material costs, including tariffs.