Stocks are rising for a third straight session to further recover from last week's coronavirus-fueled selloff. The reported number of cases of the deadly disease continues to rise in China, but the outbreak is still mainly contained to that country and there are reports of some success in treating it with existing drugs. Meanwhile, economic data in the U.S. was strong this morning, adding to the optimistic tone that has returned to the domestic market this week.
ECONOMIC EVENTS: In the U.S., payroll company ADP reported private payrolls surged 291,000 in January, sharply beating estimates. The trade deficit widened 11.9% to $48.9B in December, in line with expectations. Markit's services PMI was revised up to 53.4 in the final January print from the 53.2 preliminary, which was already up from the 52.8 reading in December. ISM's services index rose 0.6 points to 55.5 in January, slightly topping expectations. WTI crude oil prices rallied over 4% to top $51.77 in morning trading in New York as OPEC+, led by Saudi Arabia, is said to push for production cuts of up to 1.0M barrels per day to offset lowered demand amid the coronavirus outbreak.
TOP NEWS: Following Disney's (DIS) fiscal first quarter report and associated call last night, shares of the media giant are down 2.5% near noon. Disney reported 26.5M paid subscribers for Disney+ as of the end of last year and said that number has grown to 28.6M by February, with Chairman and CEO Bob Iger stating that the launch of Disney+ "exceeded even our greatest expectations."
Merck (MRK) shares are down 3% following the company's fourth quarter results and fiscal year guidance. The drugmaking giant also announced plans to spin-off products from its Women's Health, trusted Legacy Brands, and Biosimilars businesses into a new, yet-to-be-named, independent, publicly traded company. After the break with "NewCo," Merck will retain its current growth pillars of Oncology, Vaccines, Hospital and Animal Health
Shares of Tesla (TSLA) are down 14% at midday following a blazing six-day rally that had seen the stock advance 60%. Reports say the carmaker is delaying Model 3 deliveries in China due to the outbreak of the new coronavirus and Canaccord Genuity analyst Jed Dorsheimer cut the stock's rating to Hold as he sees a "balanced" risk/reward for investors to lock in profits following the recent rally in the shares. The stock closed Tuesday with an advance of $107.06, or 14%, at $887.06 after having come within 3% of $1,000 per share in intraday trading.
In other automakers' news, JPMorgan analyst Ryan Brinkman lowered his price target for Ford (F) to $9 from $10 saying the company last night delivered softer than expected Q4 earnings, driven by lower Automotive EBIT, including on account of higher warranty expense in North America. General Motors (GM), which is hosting a capital markets day and also reported Q4 earnings and provided 2020 guidance, is seeing its shares rise 0.5% as the investor event continues.
Following yesterday's Wall Street Journal report that Intercontinental Exchange (ICE) had made a takeover offer for eBay (EBAY), Intercontinental Exchange confirmed that it had approached eBay "to explore a range of potential opportunities that might create value for the shareholders of both companies." However, it added that "eBay has not engaged in a meaningful way" and that the two companies "are not in negotiations regarding the sale of all or part of eBay."
MAJOR MOVERS: Among the noteworthy gainers was Macy's (M), which rose 3% after the company announced its new three-year Polaris cost reduction strategy, which involves about 125 store closures and 2,000 job cuts and is expected to generate $1.5B in annual savings. Also higher were Peabody Energy (BTU) and Coty (COTY), which gained a respective 26% and 13% after reporting quarterly results.
Among the notable losers was Spotify (SPOT), which slid 3% after reporting quarterly results and announcing the acquisition of Bill Simmons' The Ringer for an undisclosed amount.
Also lower after reporting quarterly results were Snap (SNAP) and Chipotle (CMG), which fell 11% and 3%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was up 367.30, or 1.28%, to 29,174.93, the Nasdaq was up 36.61, or 0.39%, to 9,504.58, and the S&P 500 was up 31.08, or 0.94%, to 3,328.67.
Disney
-3.5 (-2.42%)
Merck
-2.66 (-3.01%)
Tesla
-123.14 (-13.89%)
General Motors
+0.14 (+0.41%)
Ford
-0.895 (-9.76%)
eBay
-0.245 (-0.66%)
IntercontinentalExchange
+0.17 (+0.18%)
Macy's
+0.455 (+2.76%)
Peabody Energy
+1.73 (+23.35%)
Coty
+1.36 (+12.78%)
Spotify
-6.045 (-3.91%)
Snap
-2.25 (-11.85%)
Chipotle
-24.155 (-2.73%)