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Powell Upbeat, but US Stocks Finish Mixed as China and WHO Clash About Severity of Coronavirus Outbreak

James Hyerczyk

The major U.S. stock indexes settled mixed on Tuesday as upbeat comments about the economy from Federal Reserve Chairman Jerome Powell and positive remarks from Chinese officials about the deadly coronavirus epidemic failed to impress investors enough to sustain earlier gains.

The S&P 500 and NASDAQ Composite reached their second consecutive record closing highs on Tuesday, but both closes were well off their highs. Once again the Dow Jones Industrial Average failed to reach and new record high and bucked the tone with a lower close.

In the cash market, the benchmark S&P 500 Index settled at 3357.75, up 5.66 or +0.17%. The blue chip Dow Jones Industrial Average finished at 29276.34, down 0.48 or -0.00% and the technology-driven NASDAQ Composite Index closed at 9638.94, up 10.55 or +0.11%.

Fed’s Powell Says Economy in Good Place, Warns on Coronavirus

Federal Reserve Chair Jerome Powell told Congress on Tuesday that the U.S. economy is in a good place, even as he cited the potential threat from the coronavirus in China and concerns about the economy’s long-term health.

With risks like trade policy uncertainty receding and global growth stabilizing, “we find the U.S. economy in a very good place, performing well,” Powell told the U.S. House of Representatives Financial Services Committee. The U.S. economic expansion, now in its 11th year, is the longest on record.

“There is no reason why the expansion can’t continue,” he said, repeating the central bank’s view that its current target range for short-term borrowing costs, between 1.50% and 1.75%, is “appropriate” to keep the expansion on track.

But, he said, the outbreak of the new coronavirus will impact China and its close neighbors and trading partners, and there will “very likely be some effects on the United States.”

“The question we will be asking is will these be persistent effects that could lead to a material reassessment of the outlook,” he said. The answer, he said, is still too early to know.

Chinese Officials Think Deadly Coronavirus Epidemic Could Be Contained by April

China’s foremost medical adviser on the coronavirus outbreak, Zhong Nanshan, said on Tuesday numbers of new cases were falling in some provinces and forecast the epidemic would peak this month.

“I hope this outbreak or this event may be over in something like April,” Zhong, and epidemiologist whose previous forecast of an earlier peak turned out to be premature, told Reuters.

Total cases of the new coronavirus in China have now hit 44,653, according to Chinese health officials, including 2,015 new confirmed cases on February 11. That was the lowest daily rise in new cases since January 30.

World Health Organization Not on Same Page with China

While Chinese health officials said the situation was under control, the World Health Organization (WHO) warned the epidemic posed a global threat potentially worse than terrorism.

The world must “wake up and consider this enemy virus as public enemy number one,” WHO chief Tedros Adhanom Ghebreyesus told reporters on Tuesday, adding the first vaccine was 18 months away.

Asked about Zhong’s prediction, Australia’s chief medical officer, Brendan Murphy, said: “I think it’s far too premature to say that”.

“I think we’ve just got to watch the data very closely over the coming weeks before we make any predictions,” he told the Australian Broadcasting Corp on Wednesday, while praising China’s “Herculean efforts” to contain the virus.

This article was originally posted on FX Empire

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