Stocks shake off virus fears to punch higher on rosy earnings reports

U.S. stocks climbed on opening Friday, with equity benchmarks set to end the week mostly higher, despite anxieties around a fast-moving Asia flu outbreak that has seen death tolls rise in China. Investor optimism following quarterly results buoyed shares of companies like Intel Corp. and American Express.

How are benchmarks performing?
The Dow Jones Industrial Average DJIA, -0.06% opened about 69 points or 0.2% higher, near 29,230, while the S&P 500 SPX, -0.24% opened about 7 points, 0.2%, higher, near 3,332. The Nasdaq COMP, -0.03% opened about 43 points, 0.4%, higher, at about 9,446, hitting a fresh intraday high.

On Thursday, the Nasdaq Composite COMP, -0.03% ended the day at a record, with a gain of 18.71 points, or 0.2%, at 9,402.48 for a record close. The S&P 500 SPX, -0.24% rose 3.79 points, or 0.1%, to end at 3,325.54, while the Dow DJIA, -0.06% lagged behind, ending 26.18 points lower at 29,160.09, off 0.1%.

For the week, the Dow was set to post a weekly decline of 0.2%, the S&P 500 was on pace to register a slight increase of 0.1%, and the Nasdaq Composite Index was on track to end the holiday-shortened week up 0.6%, according to FactSet data.

What’s driving the market?
Wall Street has been buoyed by corporate earnings reports with the likes of Intel and American Express helping investors momentarily shake off concerns about the spread of coronavirus in China.

So far the news has been good from American corporations.

Of the 74 of the companies that have reported in the S&P 500 index thus far, 67.6% have reported above analysts’ consensus expectations, while 23% have reported below, compared with an average of 65% of companies outperforming and 20% missing since 1994, according to I/B/E/S data from Refinitiv.

Stocks have largely recovered losses seen as China’s coronavirus spread after the World Health Organization said Thursday it was too early to declare a global health emergency.

Still, the death toll in China is climbing. China confirmed 830 cases of infection on Friday morning, with the official death count at 26, according to Chinese commission and state media.

“State media has the death toll at 26 and concerns are growing that the travel bans in place will start to have a major impact on the economy with some calling for a 1 percentage point hit or greater with Chinese GDP,” wrote Edward Moya, senior market analyst at brokerage Oanda, in a daily research note.

Later Friday, IHS Markit is scheduled to publish the latest U.S. purchasing managers index (PMI) data for January at 9:45 a.m. Eastern Time, which may show a modest slowdown in the manufacturing sector of the economy.

Which stocks are in focus?
Shares of Dow components Intel Corp. INTC, +7.21% were up more than 6% after the chip maker reported fourth-quarter earnings that beat expectations following an upswing in personal-computer shipments and robust demand for chips to power data centers.

American Express Co. AXP, +3.11% shares rose nearly 4%, toward a record, in premarket trading Friday, after the credit-card and travel-services company reported a fourth-quarter profit that beat expectations. Revenue was in line with forecasts.

Inovio Pharmaceuticals Inc. INO, +17.15% shares roared 21% higher Friday after the company received a grant to develop a vaccine for the coronavirus.

Shares of Union Pacific Corp. UNP, -0.04% were expected to be in focus after Benchmark analysts started coverage of the company with a buy rating and a price target of $206, about 10.7% higher than current trading levels.

Check out MarketWatch’s column Need to Know: Apple shares are bound for $400, says analyst who helped spark Tesla rally this week

How are other markets trading?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.91% ticked up fractionally to 1.743% as investors mulled slightly stronger growth in the Eurozone.

The value of the U.S. dollar rose 0.1% against a basket of its peers, according to the ICE U.S. Dollar Index. DXY, +0.17%

Crude-oil prices fell, with the cost of a barrel of West Texas Intermediate crude for March CLH20, -1.87% down about 75 cents or 1.4% to $54.85 a barrel on the New York Mercantile Exchange.

Gold for February delivery GCG20, +0.29% fell $5.00 or 0.3% to about $1,560.40.

In Europe, the STOXX Europe SXXP, +1.13% jumped 1.2% to about 424.84, while the FTSE, +0.92% slid 0.9% to about 7,508.

In Asia overnight, the China CSI 000300, -3.10% , Japan’s Nikkei 225 NIK, +0.13% added 0.1% and Hong Kong’s Hang Seng Index HSI, +0.15% rose .15%.

MarketWatch

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya