Equities Edge Higher, Strong Earnings Support Market, Coronavirus Spreads

The U.S. Equities Indices Are Higher In Early Trading

The U.S. equities futures are pointing to a slightly higher open on Friday. Trading sentiment is buoyed by a round of better than expected earnings from names like Nvidia, Newell Brands, and Canopy Growth Corp. Despite the earnings, the shadow of China’s coronavirus outbreak remains over the market. China reported 121 new deaths and nearly 5,100 new infections since yesterday’s report. The new deaths include numerous medical workers suggesting the virus is far more contagious than first understood.

The NASDAQ Composite is in the lead in the early premarket session. The tech-heavy index is up nearly 0.30% compared to a 0.18% advance for the S&P 500 and 0.18% increase for the Dow Jones Industrials. Traders should note, while the major indices are pushing to new all-time highs the Dow Jones Transportation Average has yet to break out. If Dow Theory holds true, the transports must confirm the new highs else the broader market is doomed to correction.

Earnings Are Better Than Expected

Nearly 80% of the S&P 500 have reported earnings so far this cycle and the results are better than expected. The broad market is looking at EPS growth in the range of 1.0%, far better than the -2.0% predicted just before the cycle started. Today’s news includes reports from consumer products company Newell Brands among others.

Newell Brands reported better than expected top and bottom-line results. The bad news is net revenue fell on a YOY basis and the guidance for 2020 is weak. Shares are flat in early trading. Nvidia, on the other hand, beat expectations and gave positive outlook sending shares up more than 6.0%. Strength was driven by data center demand that is in turn driven by the growing cloud-computing industry.

Canopy Growth Corp reported better than expected earnings and sent its shares up more than 20%. The Canadian cannabis giant says revenue grew nearly 50% on a YOY basis and smashed the consensus estimate.

Economic Data Good But Not Great

Today’s economic calendar includes Retail Sales and Import/Export Prices. On the inflation front, import and export prices came in better than expected. The import price came in unchanged versus an expected drop while export prices rose 0.7%. The data shows global demand is accelerating and that bodes well for 2020 GDP. In retail news, Retail Sales rose 0.3% as expected and up 0.4% at the core level. Core retail sales are a tenth better than expected. While good, the data offset by revisions to the previous month’s data.