Very briefly today it appeared that the market would reverse its slide and bounce back from yesterday's selloff. However, by early in trading the major averages had fallen into negative territory and the losses accelerated from there as markets around the world are increasingly spooked by the spread of the coronavirus. The Centers for Disease Control and Prevention said Americans should prepare for significant disruptions - potentially including school closings, cancellations of sporting events, and business meetings - if the coronavirus outbreak begins to spread locally in the U.S. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases, said on a call with reporters that the CDC is preparing as if the virus will become a pandemic, stating that “It is not a matter of if, but a question of when, this will exactly happen.”
ECONOMIC EVENTS: In the U.S., the Case Shiller's 20-city home price index rose 0.04% to 218.73 in December. The FHFA home price index rose 0.6% to 283.0 in December. The Richmond Fed index tumbled 22 points to -2 in February, which was weaker than expected. The Conference Board's Consumer Confidence Index improved slightly in February to a reading of 130.7, up from 130.4 in January.
Meanwhile, White House economic adviser Larry Kudlow said during an interview on CNBC that he doesn't believe the coronavirus is "going to be an economic tragedy, at all" and that the U.S. has contained the outbreak "pretty close to airtight." Kudlow added that he is "not hearing" about any emergency rate cut from the Federal Reserve following whispers that the Fed might be weighing a cut amid the coronavirus outbreak.
TOP NEWS: Shares of Home Depot (HD) fell 1%despite reporting better than expected fourth quarter sales and profits, stating that the results "reflect strength in our core business, solid execution around our holiday events and the overall health of the consumer." Macy's (M) also fell 5.4% after reporting results despite CEO Jeff Gennette contending that the company "executed well during the Holiday 2019 season."
Last night, MasterCard (MA) warned that cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the coronavirus. As a result, the company now expect that if the trends seen recently continue through the end of the quarter, year-over-year net revenue growth in the first quarter will be approximately 2-3 percentage points lower than discussed on its January 29 earnings call. Also issuing a coronavirus warning, United Airlines (UAL) withdrew its FY20 guidance due to the disease outbreak.
HP Inc. (HPQ), in addition to reporting earnings, announced a new buyback authorization as well as an incremental cost savings plans. HP also said it believes there is "merit in industry consolidation," but that the revised Xerox proposal announced on February 10 is "fundamentally flawed" and meaningfully undervalues HP.
In M&A news, Intuit (INTU) confirmed last night that it has agreed to acquire Credit Karma, the consumer technology platform with more than 100 million members in the U.S., Canada and U.K., for approximately $7.1B in cash and stock.
Meanwhile, the Wall Street Journal reported that the FAA is now focusing on assembly line procedures at aircraft maker Boeing (BA), ordering more safety procedures at the aircraft maker "before Boeing's 737 MAX jets can return to the air, this time targeting assembly-line lapses that could result in dual-engine power loss in the event of a lightning strike."
Additionally, Florida Attorney General Ashley Moody announced that a bipartisan group of 39 attorneys general is investigating Juul Labs, company 35% owned by Altria (MO), in an effort to explore the e-cigarette maker's marketing and sales practices, including the targeting of youth, claims regarding nicotine content, and statements regarding risks, safety and effectiveness as a smoking cessation device. The news comes as the Wall Street Journal reported that two Juul executives will leave the company as it scales back its overseas operations.
MAJOR MOVERS: Among the noteworthy gainers was Mallinckrodt (MNK), which rose 16.4% after it reported quarterly results and announced a $1.6B global opioid settlement through Chapter 11 for its specialty generics-focused subsidiaries. Also higher was Moderna (MRNA), which gained 27.8% after it announced that it has released the first batch of mRNA-1273, the company's vaccine against the novel coronavirus, for human use.
Among the notable losers was Cornerstone OnDemand (CSOD), which dropped 28.4% after reporting earnings and announcing it has entered into a definitive agreement to acquire Saba, a player in talent experience solutions and a portfolio company of Vector Capital, in a cash and stock transaction valued at approximately $1.395B. Also lower was Tupperware Brands (TUP), which plunged 45.6% after it provided a downbeat outlook for fiscal 2019 and fiscal 2020.
INDEXES: The Dow fell 879.44, or 3.15%, to 27,081.36, the Nasdaq lost 255.67, or 2.77%, to 8,965.61, and the S&P 500 declined 97.68, or 3.03%, to 3,128.21.
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