After seeing a bounce yesterday, stocks fell right back down as the coronavirus fallout continues to force event cancellations, corporate profit warnings and guidance withdrawals. The latest data from the Johns Hopkins Whiting School of Engineering shows there are now 124,578 cases of COVID-19, including over 1,100 in the U.S., and 4,584 deaths due to the disease. Goldman Sachs equity strategist David Kostin told investors this morning that he believes "the S&P 500 bull market will soon end," noting that his new mid-year S&P 500 target of 2,450 represents 15% downside from current levels and 28% below the market peak. Meanwhile, President Trump tweeted that he is "fully prepared to use the full power of the Federal Government to deal with" the coronavirus and that "we are putting into policy a plan to prevent, detect, treat and create a vaccine" to "save lives in America and the world."
ECONOMIC EVENTS: In the U.S., the Consumer Prices Index rose 0.1% for the headline figure and 0.2% on the core reading for February, as expected. Meanwhile, the Open Market Trading Desk at the Federal Reserve Bank of New York released the repurchase agreement operational schedule for the upcoming period. Beginning Thursday, March 12, 2020 and continuing through Monday, April 13, 2020, the Desk will offer at least $175B in daily overnight repo operations and at least $45B in two-week term repo operations twice per week over this period.
In Europe, the Bank of England's Monetary Policy Committee voted unanimously to reduce its bank rate by 50 basis points to 0.25%. The MPC also voted unanimously for the Bank of England to introduce a new term funding scheme with additional incentives for small and medium-sized enterprises, financed by the issuance of central bank reserves.
In coronavirus news, the World Health Organization has declared that the coronavirus outbreak is now a pandemic, with WHO Director-General Tedros Adhanom stating that it "is not a word to use lightly or carelessly." "Describing the situation as a pandemic does not change WHO’s assessment of the threat posed by this virus. It doesn’t change what WHO is doing, and it doesn’t change what countries should do...We have rung the alarm bell loud and clear," the Director-General added in his opening remarks at a media briefing on the COVID-19 situation.
TOP NEWS: PepsiCo (PEP) announced an agreement to acquire energy drink maker Rockstar Energy Beverages for $3.85B. After the deal announcement, Stifel analyst Mark Astrachan noted that Rockstar is the fourth-largest U.S. energy drink brand and he views the deal as having a minimal impact on Monster Beverage (MNST) competitively. However, if acquiring Rockstar allows Pepsi to create a distribution agreement or take an equity stake in Bang, which is the third-largest U.S. energy drink brand, it could result in Coca-Cola (KO) wanting more control of its destiny in the category, Astrachan added.
In other M&A news, DXC Technology (DXC) announced an agreement to sell its U.S. state and local Health and Human Services business to Veritas Capital for $5B.
Boeing (BA) reported 46 canceled jet orders for February, including 11 737 MAX planes canceled by Air Canada (ACDVF). The company also booked new orders for 18 planes, including 17 orders for 787 jets, resulting in a net loss of 28 orders.
Adidas (ADDYY), along with its report of fourth quarter earnings, said that the company has been experiencing a material negative impact on its operations due to the outbreak of the coronavirus after its business in Greater China performed strongly in the first three weeks of 2020.
Meanwhile, California Attorney General Xavier Bacerra announced that a settlement has been reached with T-Mobile (TMUS) regarding the company's pending acquisition of Sprint (S). The settlement includes terms to protect low-income subscribers, extend access to underserved communities, protect current T-Mobile and Sprint employees, and create jobs in California, Becerra said. Connecticut AG William Tong also announced a settlement with T-Mobile over the Sprint merger matter.
Additionally, the Wall Street Journal reported that Starboard has nominated a slate of directors to the board of eBay (EBAY). Shares of eBay were 3.4% lower after the news.
MAJOR MOVERS: Among the noteworthy gainers was Vir Biotechnology (VIR), which rose 12.9% after it announced a research collaboration agreement with the National Institutes of Health and the National Institute of Allergy and Infectious Diseases, Vaccine Research Center to advance characterization and development of human monoclonal antibodies against coronaviruses, including SARS-CoV-2, the virus that causes the disease COVID-19. Also higher was Mallinckrodt (MNK), which gained 39.3% after it announced that New York State Attorney General Letitia James has joined 47 other state and U.S. Territory Attorneys General in supporting the previously announced proposed global opioid settlement with Mallinckrodt and related entities.
Among the notable losers was Matador Resources (MTDR), which fell 17.8% after providing an update on its 2020 operational plan following the decline in oil prices. Also lower was Avid Bioservices (CDMO), which dropped 24.7% after reporting quarterly results.
INDEXES: The Dow fell 1,464.94, or 5.86%, to 23,553.22, the Nasdaq lost 392.20, or 4.7%, to 7,952.05, and the S&P 500 declined 140.85, or 4.89%, to 2,741.38.
PepsiCo
-4.57 (-3.40%)
Monster Beverage
-4.18 (-6.33%)
Coca-Cola
-1.44 (-2.68%)
DXC Technology
+0.01 (+0.06%)
Boeing
-42.42 (-18.35%)
Air Canada
+ (+0.00%)
Adidas
+ (+0.00%)
T-Mobile
+1.51 (+1.78%)
SentinelOne
+0.27 (+3.15%)
eBay
-1.18 (-3.28%)
Vir Biotechnology
+3.43 (+11.45%)
Mallinckrodt
+0.855 (+39.04%)
Matador
-0.39 (-16.46%)
Avid Bioservices
-1.5 (-24.96%)