Headlines out today confirm that the number deaths caused by the coronavirus from China in the U.S. has vaulted to six, but market participants appear comfortable wagering that the world’s marquee central banks — namely the Federal Reserve and Peoples Bank of China (PBOC) — will work together to launch coordinated policy responses should the virus continue hindering the global economy.
- The S&P 500 jumped 4.60%
- The Dow Jones Industrial Average advanced 5.09%
- The Nasdaq Composite gained 4.49%
- In some welcomed relief for beleaguered technology investors, Apple (NASDAQ:AAPL) was the Dow’s top performer today, surging 9.31%.
Following last week’s rout — one that saw the S&P 500 notch a double-digit loss — investors appeared to buying the dip today, even as the Organisation for Economic Co-operation Development (OECD) global growth this year will sink to its lowest levels in over a decade.
Adding to those concerns, the Institute for Supply Management (ISM) said Monday its factory index for February fell to 50.1 from 50.9 in January. The good news is readings above 50 are considered positive, but ISM acknowledged the February reading was a “weak level.”
Yes, there are clearly a growing number of data points that point to contraction for the global economy over the current quarter and perhaps second and third quarters, but investors were undaunted today as 26 of 30 Dow stocks were higher in late trading.
Apple Dip Buyers Emerge
Apple is likely one of the prime candidates for dip buying and bullish price target revisions by analysts following the stock’s recent retrenchment.
Apple stock did indeed get some love today as Oppenheimer analyst Andrew Uerkwitz upgraded the iPhone maker to “outperform” from “perform” while lifting his price target to $320. That implies upside of about 10% from where Apple stock closed today.
“Apple has mastered the art to turn technology into deeply personal and indispensable everyday objects from phones to Watch to AirPods. We believe Apple products and services will prove more resilient than competitive products in uncertain times,” said Uerkwitz in a note to clients.
Walmart (NYSE:WMT) was keeping pace with Apple as one of the Dow’s best performers today, a pleasant surprise after defensive stocks failed investors last week. On light news but heavy volume, WMT’s Monday ebullience appears to be a tied to shoppers stocking up on necessities, such as bottled water, household cleaning items, hand sanitizer and soap in preparation of the coronavirus spreading across the U.S.
Verizon (NYSE:VZ) is another example of a defensive name that didn’t live up to that reputation last week, but the stock rebounded today after Cowen & Co. upgraded it “outperform” from “market perform.” That positioned Verizon shares for their best intraday performance since mid-2017.
There’s also a Walmart tie in as the two companies are reportedly in talks for the retailer to have Verizon install 5G antennas at Walmart locations across the U.S.
After ranking as one of the worst Dow offenders last Friday, Boeing (NYSE:BA) rebounded today amid reports it’s on a hiring spree in an effort to get the 737 Max plane airborne again by the middle of this year.
“Once Boeing starts to emerge from the Max crisis, it will need the extra employees to mount a commercial comeback for the plane — both in the factory and in the parking lots where the company and airlines have stored about 800 aircraft,” according to Bloomberg.
Merck the Magnificent
Merck (NYSE:MRK) was in the upper tier of Dow stocks today after the company said it will present new data on its HIV treatments at the Conference on Retroviruses and Opportunistic Infections (CROI 2020) next week.
“Merck’s commitment to HIV spans exploratory research to Phase 3 trials and is fueled by our goal to develop meaningful scientific innovations that someday may help people living with HIV,” said Dr. George Hanna, vice president and therapeutic area head of infectious diseases, Global Clinical Development, Merck Research Laboratories, in a statement.
Bottom Line on the Dow Jones Today
Tomorrow is Super Tuesday, meaning the Democratic field of presidential hopefuls — one that has already been parsed in recent days — could see further paring come Tuesday night or Wednesday morning.
I mention this because UnitedHealth Group (NYSE:UNH) was also among the best-performing Dow stocks today, perhaps an indication that former Vice President Joe Biden’s resurgence bodes ill for Medicare For All champion Sen. Bernie Sanders.
As of this writing, Todd Shriber did not own any of the aforementioned securities. He has been an InvestorPlace contributor since 2014.