S&P 500

Equity Markets Rise, Economy In Good Place, Viral Impact Remains An Unknown

The Futures Are Pointing To A Higher Open

The U.S. index futures are pointing to a higher open on Wednesday following new all-time highs set in the previous session. The move is largely earnings-driven despite the unknown impact of China’s coronavirus. China reported 97 more deaths in the overnight session, the total number of cases now tops 44,000. The pace of spread appears to be slowing but the virus is not fully contained. Singapore reported this morning another case and line of infection has been found there. The NASDAQ Composite is leading the charge with a gain of 0.55% while the Dow and S&P 500 trail with gains near 0.45%.

Shares of gaming and airline stocks are leading today’s action. Wynn Resorts and Las Vegas Sands are both up more than 2.0% due to their heavy exposure to China. Airlines are up a more tepid 0.5% to 1.0%. In earnings news, shares of Lyft fell -5.2% after reporting strong earnings and weak guidance. The company sees growth slowing in 2020, not something the market likes to hear. Shares of CVS, Coors, and Teva are all moving higher in the premarket after reporting better than expected earnings.

Earnings Season Still In Focus

CVS lags the group with an advance of 2.5%, the integrated healthcare company beat on the top and bottom line and posted a high single-digit increase in prescription volume. Teva Pharmaceuticals saw its shares rise by about 3.4% in the premarket session due to signs its turnaround plans are working. EPS is up more than 100% on a YOY basis with a positive outlook for 2020 growth.

Molson-Coors leads today’s earnings news with its gain of 3.6%. The beermaker has made a push to premiumization that is driving top and bottom-line results. so far, about 70% of the S&P 500 has reported for the 4th quarter with more than 70% of them beating consensus. The caveat for traders is that the pace of outperformance is below the historical averages and the outlook for future growth continues to see downward revisions.

The Economy Is In A Good Place

Jerome Powell dominates the economic calendar this week with his testimony to Congress. According to the Fed Chief, the U.S. economy is in a good place. The committee is watching the coronavirus outbreak for potential spillover into the U.S. economy but does not rate it a major risk. The committee also expects current monetary policy to be appropriate for the foreseeable future.

There is no data due out today but some important releases will come out on Thursday and Friday. Tomorrow, the all-important CPI is expected to hold steady at 0.2%. On Friday, traders will be watching for signs of consumer health in the Retail Sales figures.