Stocks are extending the pullback that has taken the S&P from a record high to a correction in a matter of only ten days as headlines about the coronavirus continue to dominate sentiment. In some the latest developments, the CDC said it may have found the first instance of community spread of Covid-19 in California while Microsoft (MSFT) warned that disruptions from the disease would cause it to miss it previously issued quarterly forecast.
ECONOMIC EVENTS: In the U.S., Q4 GDP growth was unrevised at the same 2.1% rate reported in the advance report. Durable goods orders declined 0.2% in January, which was not as bad a estimated. A pending home sales index climbed 5.2% to 108.8 in January, which was better than forecast. Initial jobless claims rose 8,000 to 219,000 in the week ended February 22.
The Centers for Disease Control and Prevention confirmed last night an infection with the coronavirus in California in a person who reportedly did not have relevant travel history or exposure to another known patient, stating it could possibly represent the first instance of community spread of Covid-19 seen in the U.S.
TOP NEWS: After Microsoft announced that it does not expect to meet its More Personal Computing segment guidance as the supply chain is returning to normal more slowly than expected given the Covid-19 outbreak, multiple Wall Street analysts said they believe underlying demand trends are intact and they view the bad news as temporary. Wedbush analyst Daniel Ives said that after Apple (AAPL) was the first of the tech bellwethers to confirm the damaged supply chain post the coronavirus outbreak last week, it "should not be a shocker to the Street" that Microsoft's PC business is going to be under near-term pressure.
Last night, Booking Holding (BKNG) reported "strong" Q4 results, but also cited a significant impact from the coronavirus on its forward outlook, stating that its wider than typical guidance ranges are due to "the high level of uncertainty in forecasting the coronavirus and its associated impact on the company and the travel industry generally."
In its own more optimistic coronavirus update, Starbucks (SBUX) said it is "seeing the early signs of a recovery" in China. In a letter to employees posted on its corporate blog, Starbucks CEO Kevin Johnson reported that the coffee giant now has 85% of stores open across China as it continues to assess the ongoing impact of the disease outbreak.
Virgin Galactic (SPCE) shares have fallen 17% after Morgan Stanley analyst Adam Jonas downgraded the shares to Equal Weight and Credit Suisse analyst Robert Spingarn also downgraded the stock to Neutral following with the shares up 185% year-to-date
In earnings news, Best Buy (BBY) reported better than expected sales and earnings for the fourth quarter and raised its quarterly dividend by 10%.
MAJOR MOVERS: Among the noteworthy gainers were Vir Biotechnology (VIR) and Novavax (NVAX), which surged 50% and 18%, respectively, as coronavirus fears mount. Both companies are working on coronavirus vaccines. Also higher were Etsy (ETSY) and Square (SQ), which gained a respective 16% and 11% after reporting quarterly results.
Among the notable losers was Tesla (TSLA), which slid 8% after Bloomberg reported registrations of new Teslas in China plunged 46% last month as the coronavirus outbreak adds to a slump in the country's car market. Also lower were Nutanix (NTNX) and Anaplan (PLAN), which fell 25% and 20%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was down 342.50, or 1.27%, to 26,615.09, the Nasdaq was down 137.36, or 1.53%, to 8,843.41, and the S&P 500 was down 36.50, or 1.17%, to 3,079.89.
Microsoft
-5.48 (-3.22%)
Booking Holdings
+17.62 (+1.05%)
Starbucks
-1.08 (-1.34%)
Apple
-10.87 (-3.71%)
Virgin Galactic
-5.48 (-19.10%)
Best Buy
-0.735 (-0.89%)
Vir Biotechnology
+18.54 (+53.05%)
Novavax
+1.63 (+17.68%)
Etsy
+8.16 (+16.11%)
Block
+7.655 (+9.99%)
Tesla
-70.385 (-9.04%)
Nutanix
-8.1 (-24.81%)
Acquired by Thoma Bravo 6/22
-11.095 (-19.14%)