It was a robust day in the stock market today, with equities embarking on a strong bounce Wednesday. The catalyst? What else but trade war optimism. China has reportedly brought its largest trade team to date to Washington, D.C. and investors are hopeful the two sides can reach some sort of agreement.
While an agreement on the “easy” stuff may offer little more than trade-war filler, it will at least show that the U.S. and China can come to some kind of agreement on something. Although, the more difficult trade headaches will still be there.
As the trade war drags on, the global economy is suffering as a result. If both sides can start working together, perhaps it would spur economic growth around the globe. Before getting ahead of our skis though, let’s just see how these talks go.
Johnson & Johnson’s $8 Billion Verdict
Man, Johnson & Johnson (NYSE:JNJ) just can’t get out of the litigation spotlight. Most recently it’s been the opioid epidemic, but on Wednesday, shares were under pressure after a different ruling.
A jury hit JNJ with $8 billion in punitive damages to a man who was taking Risperdal, an anti-psychotic drug. Why such a high verdict? Apparently that’s the price to pay for a man growing breasts as a side effect of the drug.
The man had previously won a $680,000 case, arguing that the company failed to properly warn of such a side effect.
A little over the top? It sure seems that way, considering Johnson & Johnson — one of the largest firms in the U.S. — had about $15.3 billion in net income in 2018. To no surprise, many investors find the verdict unwarranted, as do J&J’s lawyers.
The company’s lawyers have already filed an appeal to the ruling, arguing that the sum is “grossly disproportionate” to the man’s initial compensation. They also argue that it’s a violation of due process. I’m no lawyer — clearly — but it seems unlikely this will hold up.
Heard on the Street
Roku (NASDAQ:ROKU) shares hit the gas on Wednesday, scorching higher by almost 10%. While a broad-market rally certainly helped matters, a price target boost from Macquarie to $130 from $110 was the catalyst. Is that really worth a 10% rally? Not really. But investors used it as a reason to bid up the stock.
Apple (NASDAQ:AAPL) continues to cautiously flirt with a breakout to new highs, as was outlined earlier this week in the Top Stock Trades column. On Wednesday, shares were on the move, rallying 1.1%, after the company caught a price target increase from Canaccord. The analysts are now looking for shares to rally to $260, up from their prior target of $240.
Netflix (NASDAQ:NFLX) stock fell about 1.2% on the day, after Rosenblatt analysts slashed their price target to $265 from $330. They say increased competition is behind the move, as Apple and Disney (NYSE:DIS) move into the streaming space.
Movers in the Stock Market Today
U.S. Steel (NYSE:X) stock hit its lowest level in three years after its CFO resigned and as the company unveiled new cost-cutting measures. Business has been tough U.S. Steel, which was recently rallying on news that it would acquire a minority stake in Big River Steel.
Levi (NYSE:LEVI) shares fell more than 7% on the day, dropping below the 50-day moving average. The decline came despite Levi beating on earnings and revenue expectations. While the company slightly missed expectations for gross margins, it seems to have done okay in the quarter, leaving some investors scratching their heads. Levi went public earlier this year at $17.
According to Nikkei, Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) is reportedly gearing to test 5G smartphones. The company has an event planned for Oct. 15 as it prepares to unveil the new Pixel 4 phones. While the company is still a new player in the smartphone game, it may be hoping to beat its competition to the 5G market.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long GOOGL, ROKU, AAPL and DIS.
