U.S. stock markets are down again in early trading as coronavirus fears continue to hit economists forecasts for growth, and a number of technology companies began to note the impact of the outbreak in their trailing earnings and future results.
The Dow Jones Industrial Average was down roughly 650 points and the Nasdaq was off 240 points near midday trading, each now steeply off their recent, record highs set earlier this year.
Last night, as President Donald Trump addressed the nation to present his administration's response to the growing coronavirus epidemic, the first case of community transmission was reported in the U.S. (in Northern California). The speech failed to stem falling sentiment, and rising concern that the global and domestic impact of the coronavirus could prove stiff, and more lengthy than brief.
And earlier today, Goldman Sachs released its economic forecast for the U.S. for the year, indicating that domestic companies will see zero earnings growth in 2020 thanks to the outbreak. While many analysts have proven loath to call bullshit on recent market levels in light of falling global macro conditions, Goldman has taken the reins.
The bank is now in contrast to other analyst group estimates, meaning that the rest of the market will either come closer to the venerable institution, or try to keep up a more positive tone. The stock market appears to be siding with Goldman, at least in today's trading.
Turning to the more tech-heavy markets, SaaS and cloud companies are also sharply lower -- again -- in today's trading. The Bessemer-Nasdaq cloud index is off 1.45% today, up from session lows, but still over 10% down from recent highs. The repricing of public SaaS companies is especially irksome for the paired worlds of startups and venture capital, as each have made large bets on the business category, partially in light of a historic appreciation in the value of public software companies.
Indeed, public investors pushed a broad basket of SaaS and cloud-focused companies to over 12x their trailing revenues, using enterprise value instead of market cap to calculate the numerator of that particular price/sales equation. That figure is being repriced in real-time on the stock market, something that will impact the value of hundreds of billions of dollars worth of private company equity.