Shares in nearly all of Minnesota's publicly traded companies were swept up Monday in a broad sell-off that was shaped by intensifying fears about the economic impact of the coronavirus.
The number of cases outside China, where the virus originated and has killed the most people, surged over the weekend, particularly in Italy and South Korea. Those two countries, like China, play an outsized role in the global economy.
The S&P 500 stock index fell 3.4%, its biggest drop since a 3.8% plunge in February 2018, and the Dow Jones industrial average fell 3.6% in Monday's trading, with energy and technology stocks hit hardest. Crude oil prices fell 4% in the U.S. and Europe. Demand for U.S. Treasuries surged, pushing down yields.
For stock investors, the sell-off brought major indexes back to the levels they were at in early December.
"We're not likely to make any progress higher until we have evidence the spread of the coronavirus is decelerating," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The health care sector was confronted with another potentially game-changing prospect: Bernie Sanders as the Democratic presidential nominee. Sanders handily won the Nevada caucus on Saturday, creating momentum ahead of votes in South Carolina later this week and the 14-state Super Tuesday primary next week. His proposed Medicare for All health care system would abolish private health insurance.
Shares in Minnetonka-based UnitedHealth Group, the nation's largest health insurer, fell 7.8% on Monday.
Last week, analysts from Deutsche Bank argued in a research note that Sanders' ascent in early nomination contests was good for insurers' stocks, since it boosted chances for the re-election of President Donald Trump. On Sunday, JP Morgan analyst Gary Taylor wrote that the sentiment of health care investors will be "volatile and ephemeral over the next several months."
"Are the rising odds of a Sanders nomination a negative catalyst for the sector [given his health care views] or a positive catalyst as oddsmakers boost Trump's re-election changes?" Taylor wrote. "We think most health care investors cite the latter, but actually fear the former."
Shares of only one other Minnesota company fared worse than UnitedHealth Group: Golden Valley-based CyberOptics Corp., a supplier of semiconductor manufacturing test equipment. Its shares fell 12%, but that followed a run-up last week after a strong results announcement. Its closing price on Monday of $21.97 was only 2% below where it finished a week earlier.
Duluth-based Ikonics Corp., which also supplies equipment used in electronics manufacturing, experienced a 6.8% drop in share value.
Ameriprise Financial, the Minneapolis-based investment advisory and asset manager, saw its shares drop 6.4%.
Minnetonka-based Northern Oil and Gas, an oil and natural gas producer with interests mainly in North Dakota, finished the day down 4.5%.
One of the few gainers in the market was Mendota Heights-based Patterson Cos., which rose 2.9%. BBQ Holdings, parent company of Famous Dave's, rose 1.7%, helped by news that a bankruptcy judge approved its acquisition of Granite City Food and Brewery, announced earlier this month.
Only 13 stocks on the S&P 500 closed higher Monday. Another of them was Mosaic Co., the former Minnesota-based maker of commercial fertilizers that is now based in Tampa, Fla. Its shares rose 1.1%.
Staff writer Evan Ramstad and Reuters contributed to this report. Patrick Kennedy • 612-673-7926 Christopher Snowbeck • 612-673-4744
