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U.S. and European stocks fall again to end the week

U.S. stocks end with a total loss for the month of January
By Masao Suzuki |
February 1, 2020
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San Jose, CA - U.S. and European stocks fell again on Friday, January 31. With the Dow Jones Industrial Average (DJIA) down more than 600 points, or 2%, U.S. stock markets ended up with a small loss for the whole of January. While losses in European stock markets were not as bad on Friday, they were over 3% for the month. Japanese stocks were also down in January, marking a worldwide stock market decline for the first month of the year.

While the still-spreading coronavirus (2019-nCoV) was again cited as the main reason for stocks dropping, in other days U.S. stocks rose despite the continuing spread of the virus. While the initial economic impact of the coronavirus and efforts to slow its spread have mainly being seen in China, it is starting to affect capitalist economies in the Japan, Europe and the United States, where the virus has started to spread.

As with the big stock drop on Monday, weak economic news set the backdrop for the Friday fall. This time it was an almost 1% drop in new orders so-called “non-defense capital goods not including aircraft.” This data is seen as a measure of businesses’ willingness to invest in future expansion, leaving out transportation orders that rise and fall a lot from month to month, and military orders. As with the weakness in housing on Monday, a sustained drop in business spending new machinery is another leading indicator a coming recession.

In Europe, weak GDP (Gross Domestic Product) reports for December and the whole of 2019 dragged down stock markets. European GDP only grew 0.4% in the last three months of the year, pulling down the growth rate for the year to only 1.2%, about half that of the United States. This was the slowest growth since 2013, when the eurozone was beginning to recover from their debt crisis that began in 2010.