The coronavirus, which led to $1.5 trillion in lost market capitalization for global equities over the past several days, continues spreading in China, but U.S. investors appeared to cast those fears aside Tuesday, sending stocks higher in decent fashion.
- The S&P 500 jumped 1.01%.
- The Dow Jones climbed 0.66%.
- The Nasdaq Composite tacked on 1.43%.
- Ahead of its earnings report after the close today, Apple (NASDAQ:AAPL) added 2.83% to rank as today’s Dow Jones leader.
Not to be lost in all the concern about the virus were some encouraging data points out earlier today in the U.S. The Conference Board’s index of consumer sentiment for January jumped to to 131.6 from 128.2 last month. That’s the highest level in five months and the December number was revised higher.
That impressive data, in part, explains why the likes of McDonald’s (NYSE:MCD), Walmart (NYSE:WMT) and Disney (NYSE:DIS) were among the Dow Jones winners today.
Separately, the S&P CoreLogic Case-Shiller National Home Price Index rose 3.5% in November following a 3.2% uptick in October. The buoyant home price data provided a boost to Home Depot (NYSE:HD), putting the stock in the upper tier of Dow winners on Tuesday.
All Eyes on Apple
Amid the coronavirus outbreak and against the backdrop of the recently signed Phase I trade deal between the U.S. and China, today’s earnings report from Apple is one of the company’s more significant profit updates in recent memory.
Wall Street is expecting Apple to report earnings of $4.54 a share on sales of $88.4 billion for its fiscal first quarter. Of course, investors will want to hear about guidance, at least for the current quarter. That looks like, on a consensus basis, earnings of $2.82 a share on revenue of $62.5 billion. Any indication that numbers will be surpassed will send the stock soaring after-hours.
Remember that in the the fiscal fourth quarter, iPhone revenue slipped, but the fiscal fourth quarter includes the launch of the iPhone 11, meaning Apple stock, which has been bid up in significant fashion over the past year, likely needs some good iPhone news over the near-term.
Setting the Record Straight
Nike (NYSE:NKE) was a modest Dow winner today despite conflicting reports about how the company was treating Kobe Bryant merchandise following the NBA legend’s untimely death Sunday in a helicopter crash near Los Angeles.
Earlier today, reports surfaced that Nike was pulling Bryant-related gear from Nike.com to prevent buyers from turning around and taking apparel, shoes and more and selling it on other online venues for higher prices.
The most recent article I found indicates Nike didn’t do that with the company saying it has sold out of the Laker legend’s jerseys, shoes and more.
No Fun for Pfizer
Pfizer (NYSE:PFE) delivered disappointing quarterly results this morning, sending the stock lower by 5.03%, making it one of the worst-performing Dow names today. Yes, the results were disappointing, but an issue for investors may have been executive comments on the conference call indicating that Pfizer will redirect some capital used for buybacks to research and development.
That’s a symptom of how addicted to buybacks investors have become and a case can be made that the reaction to Pfizer’s call to reduce share repurchases is too much. After all, the company is facing a major patent cliff over the next several years and new drugs — not buybacks — are the lifeblood of well-run pharmaceuticals firms.
Not To Be Outdone
Note above that I said Pfizer was “one of the worst-performing” Dow stocks today. The healthcare company was tussling with industrial conglomerate 3M Company (NYSE:MMM) for bottom honors today.
3M’s problems today weren’t so much about its fourth-quarter earnings report, but rather news that the company is laying of 1,500 workers. That and the pesky matter of a grand jury subpoena related to an environmental investigation.
“The company received a federal grand jury subpoena last month regarding discharges at an Alabama facility that may not have complied with relevant permits,” reports Bloomberg, citing 3M CEO Mike Roman.
Bottom Line on the Dow Jones Today
It’s not a stretch to say that although there are some other important earnings reports to digest before the bell tomorrow, much of Wednesday’s market action will be determined by what’s happening with the coronavirus in China and what Apple says on today’s conference.
It may sound simple, but barring unforeseen circumstances, that’s probably a fairly accurate 24-hour forecast for equities.
As of this writing, Todd Shriber did not own any of the aforementioned securities.
