U.S. stocks rebounded in Wednesday, reversing some of the prior day’s losses spurred by fears over a potentially deadly disease that had sickened hundreds in China.
4:15 p.m. ET: Tesla, Google-parent Alphabet post record closes
More than a dozen Nasdaq-100 companies posted record closing highs Wednesday, amid broad leadership among tech stocks during Wednesday’s session.
Shares of Tesla (TSLA), Texas Instruments (TXN), Google-parent Alphabet (GOOGL), Adobe (ADBE), Citrix Systems (CTXS), Applied Materials (AMAT) and Advanced Micro Devices (AMD) were among those closing at record highs Wednesday.
4:05 p.m. ET: Stocks pare gains, close little changed
Here’s where the major indices had settled as of 4:05 p.m. ET:
S&P 500 (^GSPC): +0.03% or +0.98 points to 3,321.77
Dow (^DJI): -0.03% or -9.56 points to 29,186.48
Nasdaq (^IXIC): +0.14% or +12.96 points to 9,383.77
Crude oil (CL=F): -2.96% or -1.73 to 56.65 a barrel
Gold (GC=F): +0.03% or +0.50 to 1,558.40 per ounce
2:22 p.m. ET: China cuts off transportation from Wuhan
Following an outbreak of the deadly coronavirus spreading around the world, China will close transportation from the virus’s epicenter, Wuhan, a city of 11 million people, The New York Times reports.
2:20 p.m. ET: French bonds turn negative
Don’t look now, but France’s sovereign paper has joined the ranks of Europe’s negative-yielding debt. According to Tradeweb data, bonds in the European Union’s 2nd largest country are down sharply in the last few weeks:
At -0.005%, the 10-year French yield is down 9.9 bps from January 13’s close of 0.094%. This yield is now at its lowest/most negative closing point since the middle of December 2019. During intraday trading, it went as low as -0.017%.
Tradeweb points out that French 30-year bonds are also trending lower, with long yields having dropped nearly 12 basis points in just over a week, to 0.813% currently. That yield is now at its lowest closing point since the middle of December 2019.
1:47 p.m. ET: Boeing CEO says delayed timeline for 737 Max’s return to service due to recommended simulator training
Newly installed Boeing CEO David Calhoun said the Boeing 737 Max’s delayed expected return to service is based on the company’s recommendation for pilots to undergo further training before flying the planes, and not due to any additional technical problems.
Boeing earlier this month recommended that pilots undergo simulator training before flying the aircraft, which has been grounded globally since last month.
Calhoun also said he wants Boeing to resume production of the 737 Max before receiving official sign-off from regulators to return to service, he said to reporters in a phone call briefing, according to multiple media reports. An expedited resumption of the 737 Max production program would provide some respite for Boeing’s suppliers, which have been shaken by the abrupt halt to production at the start of the year.
Boeing on Tuesday said it did not expect the 737 Max to be cleared to fly again until mid-2020, or about six months later than previously expected.
12:29 p.m. ET: Stocks turn mixed as Boeing, virus fears weigh
The Dow has slipped into negative territory, likely undermined by component Boeing’s (BA) ongoing 737 MAX mess. United Airlines (UAL) said earlier that it didn’t expect the troubled flagship plane to take to the skies at all this summer, which helped send Boeing’s stock down over 3%.
Here’s where major benchmarks stood at midday:
S&P 500 (^GSPC): +0.29% or +9.5 points
Dow (^DJI): flat or off 10.93 points
Nasdaq (^IXIC): +0.4% or +42.74 points
Crude oil (CL=F): -2.71% or -$1.58
Gold (GC=F): -0.03% or -$0.50
The Nasdaq and S&P are both marginally higher, within view of new intraday records set in early trading, but fears about the virus that originated in China is also a drag on sentiment.
11:14 a.m. ET: What analysts are saying about Netflix’s 4Q 2019 results
Analysts on Wall Street have mostly been constructive about Netflix following the streaming giant’s estimates-topping fourth-quarter results.
While fourth-quarter U.S. and Canada net additions and first-quarter subscriber growth guidance both came in light, most analysts pointed to the company’s still-strong performance despite encroaching competition from new services like Disney+.
Oppenheimer’s Jason Helfstein: “We raise our target to $400 from $385, maintain our Outperform as 4Q19 int'l subscribers drove 4Q upside, and should create enough buffer in 2020 against new competitor launches in the US. While 4Q US/Canada net adds were modestly lower than expected, the miss was too small to matter. More important, FY20 subscriber cadence should be similar to FY18, suggesting a more even launch schedule (no 2Q weakness), implying that new content volume has reached a sustainable level.” – Outperform, price target raised to $400 from $385
Credit Suisse’s Douglas Mitchelson: “Bears will note that the U.S. net adds for 4Q19 not only came in a bit short (423k net adds vs. 600k guide), but were well below the 1.529m net adds in 4Q18, with mgmt blaming the U.S. decline in part on competition with Disney+ (and equally due to lingering price increase churn). However, mgmt noted Disney+ has no noticeable impact on overseas subscriber trends in the markets where it launched, suggesting that the U.S. will not be the proverbial canary in the coal mine regarding the impact of competition for Netflix overseas.” – Outperform, price target $440
Piper Sandler’s Michael J. Olson: “Expect Netflix subscribers will continue to use multiple services. While domestic sub adds were below plan for Q4, viewing per member grew y/y, despite the launch of competing services. Our surveys (for example, see note dated 10/2 here) have suggested that the vast majority of Netflix subs who intend to subscribe to either of these services will do so in addition to maintaining their Netflix subscription.” – Overweight, price target $400
UBS’s Eric Sheridan: “Stepping back from the qtrly cadence to results & examining the big picture (the latter being the reason we framed NFLX as a top pick for ‘20), we cont. to see much unchanged in terms of NFLX's long term secular growth platform narrative – sub growth in ‘19 ended up being very similar to ‘18 net adds, EBIT margins cont. to expand (despite investments in content (amort) and marketing), the company cont. to make progress against becoming FCF breakeven (albeit slower than we would like) & the mix of sub growth, pricing dynamics, & scale of content investments cont. to widen the moat around the business.” – Buy, price target lowered to $400 from $405
10:30 a.m. ET: Aramco chair insists the company has a great story
Saudi Aramco, the kingdom’s oil giant, pulled off a massive public offering — but has been largely shunned by international investors amid questions about its valuation and the security of its oil supplies in the wake of a drone attack late last year. But in an exclusive sit-down with Yahoo Finance, the chairman insists that Aramco is confident in its investment story:
“I am proud Aramco is now the world’s largest listed company, after having executed the world’s largest ever IPO,” Aramco Chairman Yasir Al-Rumayyan told Yahoo Finance in an exclusive interview. “The IPO was well over-subscribed in both the retail and institutional tranches, including investment from a number of international investors. This reflects confidence in the company and is a testimony to the strong investment case and attractive prospects for long-term shareholder value creation that we laid out at the time of the IPO.”
10:04 a.m. ET: S&P 500, Nasdaq hit record highs
The S&P 500 and Nasdaq each climbed to fresh record highs Wednesday morning.
Netflix and IBM shares each jumped after stronger-than-expected earnings results delivered after market close Tuesday, and Tesla shares jumped to a record as the stock rode a weeks-long wave of optimism over the company’s future growth prospects.
10:00 a.m. ET: Housing market stays hot
Via Reuters: U.S. home sales jumped to their highest level in nearly two years in December, the latest indication that lower mortgage rates are helping the housing market to regain its footing after hitting a soft patch in 2018.
The National Association of Realtors said on Wednesday that existing home sales increased 3.6% to a seasonally adjusted annual rate of 5.54 million units last month, the highest level since February 2018. November's sales pace was unrevised at 5.35 million units.
9:55 a.m. ET: Negative rates keep Jamie Dimon up at night
Speaking to CNBC at Davos, JPMorgan Chase CEO Jamie Dimon said that negative interest rates are among a small list of things that worry him — but that the market’s otherwise in a “Goldilocks place:”
“The only thing I have trepidation about is negative interest rates, QE, and the diversion between stock prices and bond prices and yield and stuff like that,” Dimon said.
Dimon’s not the only one concerned by negative yields, a symptom of a market that’s simultaneously chasing risk assets but seeking shelter from various global storms.
In a research note Wednesday, market veteran Peter Boockvar called it a exponent of a “bond bubble” that is risker than some investors think. So who’s holding all those bonds? Why we all are — in the form of retirement, insurance and other domestic investments. As Boockvar points out:
“Americans [are holding negative rates], many I'm sure in their 401k, via The Vanguard Total International Bond ETF (BNDX). It's biggest holding is a German bund... currently yielding -.29%”
Yahoo Finance has previously reported on the subject, which can be found here.
9:35 a.m. ET: Tesla rides momentum to new record highs
Is there no stopping the bullish wave Tesla’s (TSLA) been riding over the last several weeks? The stock jumped over 4% at the opening bell, setting a new intraday record at $571. There’s no real driver but there’s no question that short-sellers are on the run with the stock up around 20% year-to-date, and a number of dominos falling the company’s way.
In Davos, President Donald Trump gave CEO Elon Musk an endorsement of sorts:
Trump on Tesla’s @elonmusk to CNBC:— Jennifer Jacobs (@JenniferJJacobs) January 22, 2020
“I was worried about him, because he’s one of our great geniuses, and we have to protect our genius. We have to protect Thomas Edison and we have to protect all of these people that came up with originally the light bulb and the wheel and all.”
9:31 a.m. ET: Stocks open higher
Stocks held onto gains from Wednesday’s pre-market session, opening higher after China signaled it was taking measures to try and contain the coronavirus that had sickened hundreds and killed at least nine.
Here were the main moves in markets, as of 9:31 a.m. ET:
S&P 500 (^GSPC): +0.29% or +9.5 points to 3,330.29
Dow (^DJI): +0.19% or +56.26 points to 29,252.30
Nasdaq (^IXIC): +0.4% or +36.98 points to 9,409.39
Crude oil (CL=F): -1.63% or -$0.95 to $57.43 a barrel
Gold (GC=F): -0.03% or -$0.50 to $1,557.40 per ounce
7:49 a.m. ET: Stock futures recover some losses
U.S. stock futures rose Wednesday morning, regaining some losses a day after fears over a potentially deadly virus knocked global markets.
During a briefing from China’s National Health Commission, officials told listeners that the government was moving quickly to address concerns over a coronavirus that had so far killed nine people, according to multiple media reports. The officials said transportation-link monitoring in China would increase, in the wake of 440 confirmed cases of the disease as of Tuesday. The U.S. CDC has so far confirmed one case in Washington State.
Meanwhile, contracts on the Nasdaq posted the largest gains of the three indices, with shares of Netflix (NFLX) rising in early trading after beating expectations for fourth-quarter results and adding more subscribers than expected. Shares of Dow-component IBM (IBM) rose after posting year-over-year revenue growth for the first time in six quarters. Both companies posted quarterly results after market close Tuesday.
Here were the main moves during the pre-market session, as of 7:49 a.m. ET:
S&P futures (ES=F): 3,333.75, up 14.25 points or 0.43%
Dow futures (YM=F): 29,268, up 89 points or 0.31%
Nasdaq futures (NQ=F): 9,238.25, up 68.5 points or 0.75%
Crude oil (CL=F): $58.02 per barrel, down $0.36 or 0.62%
Gold (GC=F): $1,555.50 per ounce, down $2.40 or 0.15%