It was a volatile trading session in the stock market today. Earnings reports from Microsoft (NASDAQ:MSFT) and Tesla (NASDAQ:TSLA) sent both stocks to new all-time highs, but that was not enough to buoy sentiment on Thursday, as coronavirus worries sent equities lower in morning trade.
As the virus continues to spread — now with more than 170 dead and 7,000 infected — investors took a risk-off approach to the day. However, after the World Health Organization spoke to the global media, fear has seemed to ease, with equities erasing Thursday’s losses and turning positive.
That said, not all is perfect. According to the WHO, the situation is a public health emergency of international concern. However, roughly 99% of the reported cases are in China. And for now, the WHO does not recommend limiting international trade and travel.
That, apparently, is good enough for Wall Street.
Thursday’s action was dominated by Tesla. Shares closed higher by 10.3% and hit a new all-time high of $650.88. Earnings of $2.14 per share breezed past expectations by 38 cents, while revenue of $7.4 billion grew slightly year-over-year and beat estimates by $300 million.
The company will need to stop production at its Shanghai facility temporarily due to the coronavirus outbreak. However, management said it will deliver more than 500,000 vehicles this year and be cash flow positive. They also said the company began a production ramp of the Model Y in January. Tesla should start delivering the new vehicle by the end of the calendar first quarter.
It’s been a tough ride for the shorts, as TSLA stock has soared from a 52-week low of $176.99 back in June.
As mentioned earlier, Microsoft was also in the news as the stock hit new 52-week highs on better-than-expected earnings. Earnings of $1.51 per share topped estimates by 19 cents, while revenue of $36.9 billion grew 13.7% year-over-year and smoked estimates by more than $1.2 billion. Despite its $1.3 trillion market capitalization, Microsoft still trails Apple’s (NASDAQ:AAPL) $1.4 trillion market cap.
Microsoft was one of our top stock trades from Thursday.
Finally, Facebook (NASDAQ:FB) took a hit on Thursday, falling 6.1% despite beating on top- and bottom-line estimates. On top of that, user growth was fine and management said it’s adding $10 billion to its buyback program.
So what’s the problem? Management said it expects first-quarter revenue to slow to the single digits vs. its fourth-quarter revenue growth. But given that the latter grew 24.8% year-over-year, that’s still a pretty respectable result.
Movers in the Stock Market Today
SoftBank (OTCMKTS:SFTBY) urged conversations between DoorDash and Uber (NYSE:UBER) around six months ago. Unfortunately, the companies weren’t able to come to a tie-up agreement, but nothing has been ruled out for potential discussions in the future.
Mortgage rates have plunged to the second lowest they’ve been in the last three years and it could be linked to the rapid spread of the coronavirus (which is driving demand for bonds and thus lowering rates). Investors are wondering if it will help keep the fire lit under stocks like PulteGroup (NYSE:PHM), Toll Brothers (NYSE:TOL) and Lennar (NYSE:LEN).
A Carnival Cruise (NYSE:CCL) ship carrying around 7,000 people was blocked from leaving a port in Italy Thursday due to a passenger possibly coming down with coronavirus-like symptoms. While the test ultimately came back negative for the virus, it still didn’t keep Carnival stock from declining 3.8%.
Altria (NYSE:MO) originally invested $12.8 billion for a 35% stake in Juul back in 2018. However, in October 2019 it was forced to take a $4.5 billion write-down on its Juul stake, and now, it announced another $4.1 billion write-down. The back-to-back reductions value Juul at just $12 billion, a big decline from its original $38 billion valuation.
MO stock fell 4.3% on Thursday, however it wasn’t just because of its write-down. The company reported in-line fourth-quarter earnings, missed on revenue estimates and lowered its earnings growth outlook for fiscal 2020 through 2022 down from a prior range of 5% to 8% to a new range of 4% to 7%.