If only the rally could have come sooner in the day or earlier this week. After a stunning fall on Thursday where equities fell about 10%, we saw a surge into the close on Friday. We saw the Nasdaq Composite gain 9.3% in the stock market today, while the S&P 500 and Dow Jones Industrial Average rose similar amounts.
Oil prices, which were down, jumped significantly — up 7.5% — while volatility finally took a dive. The VIX fell 23% on the day, ending at $57.77. While that’s still high, it’s well below the $70-plus mark we saw the other day.
So what sent stocks and oil flying higher?
Equities were high for most of the day, but late in the afternoon, President Trump declared a national emergency regarding the coronavirus from China. That will help the federal government move more quickly and access more money to address the issue. Further, he’s looking to purchase crude oil for the country’s strategic reserves, while laying out a more concrete plan for coronavirus testing.
While Carl Icahn believes there’s more selling to come, bulls were at least able to get some relief in the stock market today.
Movers in the Stock Market Today
Delta Air Lines (NYSE:DAL) took more action on Friday. The airline announced it will reduce capacity by 40% over the next few months and cancel flights to Europe. Further, the company said it will see negative net bookings over the next four weeks.
Disney (NYSE:DIS) announced the closing of Disney World for the rest of the month. The company also decided to halt the production of all live-action films. Here’s the interesting thing though. Both Disney and Delta rallied on the day, up 11.7% and 13.8%, respectively. This isn’t a bottom call, but it’s a positive development — and yes, they were up notably before the market surged in the final thirty minutes of trading, too.
That was a similar situation with Royal Caribbean (NYSE:RCL) and Norwegian Cruise Line (NYSE:NCLH). Shares surged despite the companies halting their cruises.
Another interesting tidbit, Rosenblatt analysts say Apple (NASDAQ:AAPL) could consider buying Disney after the latter’s major selloff. That’s despite Apple having “just” $107 billion in cash and short-term securities vs. Disney’s $165 billion market cap. That’s also excluding the premium that would be necessary to acquire Disney — assuming Apple were to swallow the entire company — and it also excludes the fact that Apple’s largest single acquisition was Beats for about $3 billion.
It’s still fun to think about though.
Xerox (NYSE:XRX) shares slipped on Friday, as did HP Inc (NYSE:HPQ). Xerox announced that it will pause its meetings and presentations to HP shareholders over its M&A bid to buy the company. Xerox, which hit a new 52-week low on the day, is doing so as a response to the coronavirus.
The coronavirus is a concern, but the halt in spending is also causing liquidity concerns. According to the International Air Transport Association (IATA), “Without a lifeline from governments we will have a sectoral financial crisis.” Last week, they estimated that the slowdown in traffic could impact global airline revenue by $113 billion — and that was before President Trump’s recent travel ban with Europe.
That could be a tough situation for United Airlines (NASDAQ:UAL), American Airlines (NASDAQ:AAL) and others, unless the industry gets federal help.
Earnings Roundup
Slack (NYSE:WORK) was hammered in Friday’s session, declining all the way down to $15.90 per share. That’s despite beating on earnings and revenue expectations. Guidance was a little light in some instances, but not egregiously short of consensus estimates. Shares did rebound notably, closing at $19.59 and down 8.2% for the day.
Broadcom (NASDAQ:AVGO) fell 11% on Thursday and another 9% in after-hours trading. That came after a top- and bottom-line miss and disappointing guidance. While management seems to think business will be okay, investors wanted more reassurance. However, the stock ended higher by 7% on Friday, although it took a pretty big market rally to get it out of the red.
Adobe (NASDAQ:ADBE) rallied 17.7% on Friday, as investors gobbled up the latest quarterly report. Earnings of $2.27 per share beat estimates by 4 cents, while sales of $3.09 billion grew 18.8% year-over-year and topped estimates by $40 million. The move comes despite the stock moving slightly lower in Thursday’s after-hours sessions after guidance came up a bit light.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, AVGO and DIS.
