After The Close
Stocks opened higher this morning, but sank deep into negative territory in the afternoon. The averages attempted to recover some ground late in the session, but with limited success. Earlier today sentiment seemed somewhat optimistic. However, the mood turned apprehensive, as traders worried that a deadly virus in China might be difficult to contain. Of note, the virus has made its way to a number of countries, and a second person in the U.S. was recently diagnosed with the illness. Investors seem to fear that a wider outbreak might put a damper on global business. At the close of the day, the Dow Jones Industrial Average was down about 170 points; the broader S&P 500 Index was off 30 points, and the NASDAQ was lower by 88 points. Market breadth was decidedly negative, as losers outpaced winners by a wide margin on the NYSE. Most of the major market sectors lost ground, with pronounced weakness in the services and healthcare issues. Stocks related to the travel and leisure industries moved lower on health concerns. In contrast, the utilities managed to outperform.
Meanwhile, it was a light day for economic news, with no major reports released. The lack of news probably did not help matters, as it left investors looking elsewhere for information.
In corporate news, the fourth-quarter earnings season continues. In the technology arena, shares of Intel (INTC – Free Intel Stock Report) surged today, after the chip giant posted a better-than-anticipated quarterly report, and provided an upbeat outlook. In the financial arena, shares of American Express (AXP – Free American Express Stock Report) moved up in response to a solid report. However, things did not go as well for Discover Financial (DFS), as investors had concerns about rising costs at that company.
Technically, stocks made solid progress during the first weeks of 2020. However, the market started to run into some resistance over the past few days, and gains became harder to achieve. Today, stocks sold off more dramatically. While the health-related developments in China are of some concern, it is also possible that the bulls have needed a rest.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
One issue that did not fall yesterday morning was the recently beleaguered aerospace giant Boeing (BA – Free Boeing Stock Report). That stock, a casualty of the grounding of its troubled 737 MAX 8 airliner, rebounded some 2% after having descended sharply in recent sessions. But it was not just earnings that clipped the wings of the bulls; it also were growing fears of the coronavirus starting to spread. On Tuesday, such concerns had caused a late retreat in the equity market, sending the Dow down 166 points. Then, after some equilibrium had returned on Wednesday, equities retreated again yesterday morning. Bank stocks also fell as did Treasury note yields.
The market would continue to make strides well into the final trading hour, with the Dow threatening to join the other composites in the black as we headed toward the finish line. Once again, technology led the comeback as more earnings were awaited after the close. Also, as before, there was weakness in the basic materials group, with beleaguered steelmaking giant U.S. Steel (X) falling to another 52-week low of less than $9.50 a share at the day's nadir on profitability and financial concerns. As the bell sounded, only the Dow was lower, falling 26 points, while gaining and losing stocks were about even.
Then, after the close, recently strong performing Intel (INTC – Free Intel Stock Report), a Dow component, reported record earnings and the stock jumped about 6% in after-hours trading to a multi-year high. The shares, meantime, are expected to carry that strength into the morning session, when the stock market, overall, is expected to commence the final trading day of the week with additional gains, sparked, as well, by the WHO's position that the coronavirus is not yet a global crisis.
