Stocks end lower as U.S. jobless claims edge higher
Stocks started the day weaker after China reported that coronavirus cases in its Hubei Province were revised sharply higher due to a change in its method for diagnosing the disease. Meanwhile, in the U.S., the CDC confirmed another infection with Coronavirus Disease, or COVID-19, marking the nation's fifteenth confirmed case. The coronavirus fears looked like they would spark a pullback in the market, but the major averages recovered from their early lows to end the day slightly lower. Meanwhile, on the domestic data front, jobless claims edged higher last week, but remained at a relatively stable low.
ECONOMIC EVENTS: In the U.S., initial jobless claims rose 2,000 to 205,000 in the week ended February 8. The Consumer Prices Index rose 0.1% in January while the core rate was up 0.2%, as forecast.
Meanwhile, the Centers for Disease Control confirmed the 15th case of coronavirus in the United States. The news comes as the Chinese province at the center of the outbreak reported a record rise in deaths and thousands more infections using a broader definition, while Japan became the third place outside mainland China to suffer a fatality associated with the disease, according to Reuters.
TOP NEWS: A judge has granted Amazon's (AMZN) request to temporarily block work on the $10B JEDI cloud contract that was awarded to Microsoft by the Pentagon, according to media reports. Amazon, which is protesting the Pentagon's decision to award the contract to Microsoft, alleges that it was subject to "unmistakable bias" and has since asked the court for permission to depose President Donald Trump, Defense Secretary Mark Esper and former Defense Secretary James Mattis. Microsoft shares were fractionally lower following the news.
Shares of Tesla (TSLA) closed 4.8% higher after the electric car maker said it plans to raise $2B by selling shares through a public offering. CEO Elon Musk, who had said last month that it didn't make sense to raise money since the company expected to generate cash, will buy up to $10M in shares. Commenting on the announcement, Wedbush analyst Daniel Ives told investors that he views the stock offering as "a smart move."
Cisco (CSCO) shares slid 5.2% after the networking gear maker met expectations in fiscal Q2. Citi analyst Jim Suva said that while both the results and outlook were inline, the company's product orders were down 6%, which is worse than the down 4% three months ago. Meanwhile, FireEye (FEYE) shares gained 4.6% following a report by OKDIARIO saying that Cisco might be preparing to make an offer to acquire the cybersecurity company. A person familiar with the matter told Bloomberg, however, that there was "no truth" to the speculation published by the Spanish business newspaper.
Alibaba (BABA) shares finished 1.8% lower after the Chinese e-commerce giant reported better than expected quarterly results and said that its overall revenue growth rate will be negatively impacted in the March quarter due to the coronavirus outbreak.
MGM Resorts (MGM) reported results that Morgan Stanley analyst Thomas Allen said were worse than he feared in the fourth quarter even though he had "low expectations." The casino operator, which also withdrew its FY20 financial targets, announced a new $3B share repurchase program, raised its quarterly dividend, and announced that Jim Murren will step down from his position as chairman and CEO, saw its stock slide 5.5% during the session.
PepsiCo (PEP) reported better than expected sales and earnings in the fourth quarter of 2019 and said it expects to deliver 4% organic revenue growth and 7% core constant currency EPS growth in this year.
MAJOR MOVERS: Among the noteworthy gainers was Equifax (EFX), which rose 5% after it reported quarterly results and provided guidance for the first quarter and fiscal 2020. Also higher after reporting quarterly results were Redfin (RDFN) and Hubspot (HUBS), which gained a respective 18.1% and 7.1%.
Among the notable losers was Bloom Energy (BE), which slid 7.7% after it said it would restate prior financial statements due to an accounting error. Also lower were SunPower (SPWR) and Nu Skin (NUS), which fell 19.4% and 16.3%, respectively, after reporting quarterly results.
INDEXES: The Dow fell 128.11, or 0.43%, to 29,423.31, the Nasdaq lost 13.99, or 0.14%, to 9,711.97, and the S&P 500 declined 5.51, or 0.16%, to 3,373.94.