Stocks traded higher Wednesday, as investors waded through a flood of corporate earnings reports, with better-than-expected results from blue-chip names, including Apple, Dow and McDonalds, helping to overshadow some of the concerns related to the coronavirus outbreak.
What are major indexes doing?
The Dow Jones Industrial Average DJIA, +0.41% rose 22 points, or 0.4%, to 28,846, while the S&P 500 index SPX, +0.29% gained 11 points, or 0.3%, to 3,288. The Nasdaq Composite Index COMP, +0.32% advanced 36 points, or 0.4%, to 9,305.
The Dow on Tuesday rose 187.05 points, or 0.7%, to end at 28,722.85, snapping a five-day losing streak and taking back a chunk of the previous session’s decline, which was the steepest one-day fall since October. The S&P 500 which has also suffered its biggest one-day drop since October on Monday, rose 32.61 points, or 1%, to finish at 3,276.24. The Nasdaq Composite closed at 9,269.68, up 130.37 points, or 1.4%.
What’s driving the market?
Stocks were building on Tuesday’s recovery, after significant selloffs on Friday and Monday were sparked by fears of the economic impact of a spreading coronavirus, which has now infected at least 5,327 people in China, where the death toll rose to 132.
Related: Growing number of airlines cancel flights to contain global spread of coronavirus
Investors in U.S. stocks, however, were more focused on a slew of fresh corporate earnings reports with Dow components Apple Inc. AAPL, +2.59% and Dow Inc. DOW, +4.37% rising on the backs of better-than-expected earnings reports.
See: Analysts divided on how much further Apple shares can climb after ‘blowout results’
Apple shares gained 3% to trade at a record high, after the company reported its second-best quarter for iPhone sales in the company’s history late Tuesday, while shares of Dow gained 4% after the materials sciences company reported adjusted profit and sales that fell less than expected.
“Who cares about a potential global pandemic when Apple reports results like that?” wrote Paul Hickey of Bespoke Investment Group in a Wednesday morning note. “With some relatively positive news (or a lack of truly bad news) related to the coronavirus overnight and solid earnings reports from the likes of AAPL and others,” the S&P 500 is on track to post solid gains, he added.
The results come on what could be the busiest single day of earnings season. Nearly 10% of the S&P 500 were scheduled to report Wednesday, including four members of the blue-chip Dow Jones Industrial Average. So far, nearly 25% of S&P 500 companies have reported results for the previous quarter. Of those companies, nearly 72% have beaten analyst expectations, FactSet data shows.
While Apple and a few other companies have clearly impressed investors, market participants are looking for broader confirmation that American corporations can grow earnings robustly enough this year to justify relatively earnings-per-share valuations for the S&P 500, said Willie Delwhiche, investment analyst at Baird, in an interview.
“There’s still this uncertainty around the virus and the global economy,” he said. “We had a rally yesterday in stocks, but bonds and copper didn’t confirm it.”
The number of confirmed cases of the coronavirus rose to about 6,000 with the death toll at 132.
The Federal Reserve is fully expected to leave its policy interest rate unchanged when it concludes a two-day meeting Wednesday afternoon, but the central bank and its chairman, Jerome Powell, might face a challenge in reassuring market participants as it makes technical adjustments.
See: Fed starts some tricky communications with financial markets this week
In economic data, the U.S. trade deficit rose 8.5% in the fourth quarter, the Commerce Department said Wednesday.
The National Association of Realtors said its index of pending home sales fell 4.9% in December from the previous month.
Which companies are in focus?
Boeing Co. BA, +2.27% reported a surprise loss for the fourth quarter and revenue that declined below analyst expectations amid the company’s struggles linked to the extended grounding of its 737 Max airplanes. Shares rose 2%, though they have lost 7.2% during the past 3 months, versus a 6.6% rise for the Dow.
McDonald’s Corp. MCD, +1.52% on Wednesday reported fourth-quarter earnings and revenue that beat expectations. Shares rose 1%.
Shares of chip maker Advanced Micro Devices Inc. AMD, -7.31% were down 6%. AMD late Tuesday offered an outlook that was weaker than Wall Street analysts had expected, while data-center sales disappointed.
Shares of online auction site eBay Inc. EBAY, -3.63% fell 3%. The company late Tuesday reported fourth-quarter earnings that beat the consensus forecast, but offered weak first-quarter revenue guidance.
Coffee-chain Starbucks Corp. SBUX, -2.99% late Tuesday topped forecasts with its fiscal first-quarter earnings and called its holiday season “one of the strongest” in its history. But it also warned that China’s coronavirus outbreak was likely to hit its bottom line this year. Shares declined 3%
Victoria Secret parent L Brands Inc. LB, +12.67% is exploring strategic alternatives for the lingerie brand, including a full or partial sale, according to a report in The Wall Street Journal. L Brands’ stock rose 12%.
Shares of General Electric Co. GE, +10.02% rose 10% after the industrial conglomerate reported fourth-quarter profit and revenue that topped expectations, while its earning outlook was below forecasts.
Shares of AT&T Inc. T, -3.01% T, -3.01% were off 3% after the media and telecommunications giant reported better-than-expected fourth-quarter earnings but fell short of forecasts on revenue.
How are other markets trading?
In the bond market, the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -2.45% fell 2 basis points to 1.62%.
Oil futures declined Wednesday after the U.S. government data reported domestic crude inventories posted a bigger-than-expected weekly rise. West Texas Intermediate crude for March delivery CLH20, -0.37% on the New York Mercantile Exchange fell 20 cents, or 0.4%, to $53.28 a barrel.
Gold futures eased back from earlier highs on Wednesday, as traders continue to weigh the spread of coronavirus cases and its potential impact on the global economy. Gold for February delivery GCG20, +0.04% on Comex traded at $1,569.50 an ounce, down 30 cents, or 0.02%,
The U.S. dollar edged 0.1% higher against a basket of its rival currencies, according to the ICE U.S. Dollar index DXY, +0.09%.
European stocks edged up with the Stoxx Europe 600 SXXP, +0.44% ending up 0.44% at 419.41.
In Asia overnight, stocks traded mixed, with markets in China closed in an extension of the Lunar New Year holiday enacted as authorities deal with the effects of the coronavirus outbreak. In Hong Kong, the Hang Seng Index HSI, -2.82% tumbled 2.8%, while Japan’s Nikkei 225 NIK, +0.71% gained 0.7%.
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