Equities Plummet, Virus Fear Is Rising Fast, The Earnings Outlook Is In Jeopardy

The U.S. Futures Are Down Hard

The U.S. futures are down hard in early trading as rising fear of economic fallout from the coronavirus grips the market. The Dow Jones and S&P 500 are both down about -2.80% in early trading while the NASDAQ Composite leads with a loss of -3.10%. The NASDAQ Composite is getting hit hardest due to its overweigthing in technology and internationally-based companies.

The global tally of infected has now topped 100,000 and rising. The number of dead was last reported at 3387 with 12 dead in the U.S. New York revealed their case tally has risen to 12 while California continues to crack down with its state of emergency. Internationally, Egypt is the latest to report new cases as viral spread in the Middle East accelerates. Iran and Italy remain the hardest hit outside of Asia but they may change any day.

The risk from the virus isn’t the illness itself, it is the impact on activity. The illness is less harmful than flu although much more contagious. At the current rate, we can expect it to have moved through the world’s population within the next two to three months. Until then, traders are eyeing impediments to businesses that will have an impact on future earnings.

Stocks On The Move

Today’s action is being led by travel and leisure stocks as well as the energy sector. Shares of air-carrier American Airlines and Connoco-Phillips are both down more than -5.0% while Las Vegas Sands trails at only -4.5%. Starbuck’s is the first to warn of an impact to 2nd quarter earnings but not the last. With earnings pressure extending to the 2Q, we can be sure the sell-off isn’t over yet.

In other news, Costco reports they are “beyond busy” as stockpiling and hoarders ramp up demand. Customers are preparing for extended stays at home and the possibility of mandatory quarantines.

The Labor Data Is Strong

Today’s data is dominated by a blow-out labor report. The employment situation summary, also known as the NFP, came in at a mind-bending 277,000 and 100,000 above consensus. Along with that, the unemployment rate fell to 3.5%, wages rose 0.3% MOM, and upward revision to previous data padded the report.

Regardless the data, the dollar continues to fall. The DXY is down hard over the past few days due to the FOMC’s surprise rate cut. The FOMC is expected to cut rates again as soon as two weeks at the March meeting in an effort to fight the economic impact of the virus.

Stocks Fall Sharply Again, Volatility Is On The Rise, Coronavirus Risk Drags On Sentiment

Equities Shed 2.25% In Early Trading

The U.S. equity market is indicated to open sharply lower in early trading. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all down about -2.25% with industrial giants in the lead. The moves are not a surprise in a week filled with record-setting market movements and confirm traders are still nervous. The spreading coronavirus is going to have a negative impact on future earnings that grows larger with each passing day.

In the latest news, California has declared a state of emergency. The state confirms its first death and the possibility undiagnosed infected are moving within the population. The death is reported to be a man who had disembarked a cruise ship in Los Angeles, others are known to have exited the ship as well. The U.S. Congress voted in an $8.3 billion spending package that passed with little to no opposition. The CDC says it is going to purchase 500 million high-grade masks as part of the strategic stockpile. The guaranteed purchases are hoped to spur manufacturers to ramp production.

The latest statistics have the total number of infected at 95,700 with 3,280 dead. China remains the hardest hit but its containment efforts seem to have arrested the acceleration of spread if not the spread itself. South Korea is still the #1 hardest hit outside of China with Italy and Iran not far behind. South Africa is the latest to announce the first case. Needless to say, the virus is going to be with us for a while and likely spark further volatility.

Stocks On The Move

An airline industry group has estimated the total cost to air carriers related to the virus at up to $113 billion. The news has the entire group down about -4.0%. Shares of Ciena, however, are moving higher after the networking company reported much better than expected figures.

The yield on the Ten Year Treasury fell below 1.0% for the first time ever on Thursday. The move is sparked by the Fed’s surprise rate cut on Tuesday and growing risk within the equities market. The VIX, a measure of market volatility and fear, is moving higher in early trading and may soon retest the freshly set high.

The U.S. Economy Is Still Strong

The U.S. economy is still strong, at least according to today’s labor data. The number of jobless claims fell for first-week claims and held steady for second-week claims. The data, which is slightly rear-looking, is trending near historic lows and consistent with tight labor conditions. Traders will be looking for more confirmation of labor market health in tomorrow’s NFP report.

Biden Takes Lead In Super Tuesday, Equities Surge But Give Up Early Highs, Downside Risk Remains High

Equities Up In Early Trading

The U.S. futures are indicating a solidly higher open on Wednesday. The move is driven by the Super Tuesday primary results that put Joe Biden back in the lead for Democratic Nominee. Today’s market action is firm evidence that Bernie Sander’s socialist agenda is not what investors want. Biden now leads the delegate count 453 to Sanders 373. The Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 are all up about 2.0% in premarket action.

Equity markets are also buoyed by yesterday’s surprise rate cut from the FOMC. The FOMC cut rates by 50 basis point in an emergency statement, the first since the Global Financial Crisis. The vote was unanimous, the statement from Jerome Powell cited a preemptive attempt to combat the economic effects of the coronavirus. Powell also says the U.S. fundamental outlook remains strong and that he expects a quick bounce-back once the virus is passed. Later today, traders will be on the lookout for the Fed’s Beige Book. The Beige Book is a summary of conditions across the 12 Federal reserve regions.

The Virus Is Still Spreading

New cases within China are dwindling but still rising. The epicenter of the outbreak reports 2981 dead so far. The full impact of the virus on China is only now becoming apparent. Earlier in the week, manufacturing PMI showed a deep contraction in both the large-cap and small-cap economies. Today’s news includes a read on small-cap services and it too contracted deeply. The Caixin PMI came in at a record low of 26.5.

Globally, there are more than 93,000 cases and over 3100 dead. South Korea remains the most heavily affected outside of China with 5380 cases but Italy and Iran are both struggling too. Poland is the latest to report a first case showing containment efforts are not working. Germany, Italy, and Iran all report a rising number of infected as well.

Italy has closed all of its schools in an attempt to slow the spread. In Iran, the number of infected topped 3,000 with nearly 100 dead. Iran canceled public prayer in the largest cities in its work to contain the spread. In the U.S., new centers of the outbreak are popping up along the east and west coasts.

Economic Data Still Solid In The U.S.

Today’s economic calendar includes the ADP report on labor. The report showed a larger than expected increase in new jobs for February as job gains occurred across all business sizes. The previous month was revised lower to just over 200,000 but changes to the modeling process make the comp irrelevant. Bottom line? The U.S. labor market is still healthy.

G7 Offers No Aid To Worried Markets, Coronavirus Is Still Spreading, Equities Lower Again

Equities Move Lower

The U.S. futures are indicating a slightly lower open on Tuesday. The major indices are looking at losses in the range of -0.10% after trading in a wild range during the overnight session. Today’s moves are spurred by the G7 and hope the group would announce some form of economic support. The G7 says it will act to support the economy but gave no details and disappointed hopeful traders.

The Reserve Bank of Australia announced it would cut rates by 25 basis points in the overnight hours. This puts the Australian benchmark rate at 0.50% and a record low. The RBA’s statement cited the coronavirus as a significant risk to the Australian economy. The CME FedWatch Tool shows the market is pricing in not one but three rate cuts by April. The odds are high for a 50 basis point cut this month with an additional 25 basis points next. The latest counts list more than 89,000 infected and 3,000+ dead with the virus still spreading.

Stocks On The Move

Travel & Leisure stocks are among today’s hardest hit. Shares of Carnival, Marriot, and Las Vegas Sands are all down about -0.50% in early trading. Shares of American Airlines are bucking the trend with a rebound of 4.5%.

UBS got an upgrade from Deutsche Bank based on valuation and shares advanced on the news. Kohl’s reported earnings this morning and beat on the top and bottom lines. Shares are up more than 3.0% on the news. Target and Autozone, however, are both moving lower in the premarket session. Target reports weaker than expected comps while Autozone’s mixed results and tepid outlook did not please investors.

Volatility Is On The Rise

The VIX has retreated from its recently set high but traders are not complacent. The fear-index is trading well-above ordinary levels and points to ongoing volatility in the market.

Volatility may be sparked again this week and there are a number of catalysts to do it. First and foremost is the coronavirus. The spreading virus and potential for economic impact are becoming very real and much larger than first thought. The UK estimates that up to 20% of the workforce could be out of work due to the cold by the time the pandemic has passed.

On the economic front, the Fed’s Beige Book stands the most chance for moving the market. A strong report could dash hopes for FOMC easing at the March meeting. A weak report will reinforce the idea the U.S. economy is threatened by the virus and raise the odds of future rate cuts. After that, the NFP and labor data will be the most closely watched.

Stocks Continue To Fall, Coronavirus Scare Still Spreading, Big Data On Tap

Equity Futures Have Wild Ride

The U.S. index futures are indicated to open with modest losses on Monday. This comes after a wild ride in the overnight electronic session. The Dow Jones Industrial Average had been down as much as 500 points or -2.0% but cut the loss to only -0.25% by the 8:30 AM hour. Trading had turned mildly positive but those gains were not able to hold. The S&P 500 and NASDAQ Composite are indicated to open with losses of -0.45% and -0.15% after similarly wild trading in overnight action.

The moves are driven by the spreading fear of the coronavirus. It’s not that the coronavirus is all that deadly, it’s the growing potential for significant economic disruption that has the market scared. The number of infected has grown to over 89,000 with more than 3,000 dead and new outbreaks popping up every day.

NY confirmed its first case over the weekend, becoming the second east coast state to do so. Europe has raised its threat level to severe as it battles spreading outbreaks in Italy and other parts of the union. A member of Iran’s parliament says his country is hiding a “horrific” number of deaths related to the virus. Infections have been reported in the highest levels of Iran’s government.

Stocks On The Move

United Airlines is down more than -2.5% this morning. The global air-carrier says it may have to further reduce the number of planned flights because of the viral impact to travel. Other airlines are down about -2.0%. Shares of Marriott are also moving lower, down about -2.25%, as traders trim back full-year revenue outlook. Cruise-ship operator Carnival is down -7.0% on virus fears, it is one of the worst-hit in today’s action.

Both Gold and Oil are trading at support levels this morning. Gold prices are in an uptrend and confirming support at the previous multi-year high. Oil prices are in steep decline. The demand outlook for oil was already tepid, the onset of coronavirus and Wuhan Flu has taken a serious toll. ConocoPhillips, an integrated oil company, is down more than -6% on falling oil prices, declining demand outlook, and lower EPS forecasts.

A Big Week For Data

This is a big week for data and today’s list is no exception. Traders can expect readings on PMI and ISM manufacturing later in the session. Also on tap, today is construction spending. Later in the week, we’ll get an important read from the Fed, the Beige Book. Along with that is the ADP, Challenger, and NFP reports on employment.

The Week Ahead – Alarming China PMIs to Set the Tone in a Busy Week Ahead

On the Macro

It’s a busy week ahead on the economic calendar, with 61 stats to monitor in the week ending 7th March. In the previous week, 56 stats had been in focus.

For the Dollar:

It’s a busy week ahead on the economic calendar.

Through the 1st half of the week, private sector PMI numbers and ADP nonfarm employment change figures are in focus.

Expect the markets preferred ISM Survey based numbers due out on Monday and Wednesday to have the greatest impact.

There is more downside risk on the cards for the Greenback, however, should ADP numbers disappoint.

We saw the Markit Survey based PMI numbers report a contraction in the U.S services sector. Pressure on the Dollar and risk aversion could build should the ISM figures affirm a contraction.

In the second half of the week, labor market numbers due out on Friday will also influence.

Expect wage growth and nonfarm payrolls to be the main area of focus. Any hint of weaker labor market conditions and there could be yet more drama for the Dollar.

Outside of the numbers, expect news updates on the coronavirus and chatter from the Oval Office to also influence.

The Dollar Spot Index ended the week down by 1.21% to 98.132.

For the EUR:

It’s also a busy week ahead on the economic data front.

In the 1st half of the week, the private sector is back in focus with the manufacturing and service sector PMI numbers out of Italy and Spain.

Finalized numbers are also due out of France, Germany, and the Eurozone. Expect Germany, Italy and the Eurozone’s numbers to have the greatest influence on Monday and Wednesday.

On Tuesday, the Eurozone’s unemployment rate will also provide the EUR with direction.  Any rise in the unemployment rate will raise doubts over consumers providing support through spending.

The proof will be in the pudding, with retail sales figures due out of Germany and the Eurozone on a particularly busy Wednesday.

In the 2nd half of the week, Germany is back in focus, with January factory orders due out on Friday.

After December’s 2.1% slide, any weak set of numbers would weigh on the EUR.

Outside of the numbers, updates on the coronavirus will influence. Currently, Lagarde is unwilling to deliver support, while the markets are pricing in FED rate cuts…

The EUR/USD ended the week up by 1.65% to $1.1026.

For the Pound:

It’s a busier week ahead on the economic calendar.

Key stats include finalized manufacturing and service sector PMI numbers due out on Monday and Wednesday.

Expect any upward revisions to provide support in the 1st half of the week.

On Tuesday, the construction PMI would need to hold steady, however, to avoid a pullback to sub-$1.28 levels.

While the stats are in focus, geopolitics will have a greater impact in the week. The EU and Britain return to the negotiating table and that’s tended to be Pound negative.

The GBP/USD ended the week down by 1.09% to $1.2823.

For the Loonie:

It’s another relatively busy week ahead on the economic calendar.

In a quiet 1st half of the week, however, with economic data limited to 4th quarter labor productivity numbers due out on Wednesday.

We would expect the numbers to have a muted impact on the Loonie, however, with the Bank of Canada in action on Wednesday.

In the 2nd half of the week, employment, trade, and the Ivey PMI will provide direction on Friday.

Outside of the numbers, the BoC’s forward guidance will be key to the Loonie’s sensitivity to the numbers.

Concerns over the impact of the coronavirus on global trade will likely leave the BoC on a dovish footing. The real question is whether the stats have been bad enough to support a cut. Oil prices alone suggest the need for more support.

On the risk front, expect updates on the coronavirus to continue to impact crude oil prices and the Loonie.

The Loonie ended the week down by 1.38% to C$1.3407 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly busy week ahead.

In the 1st half of the week, stats include Manufacturing and gross operating profit numbers on Monday and building approval figures on Tuesday.

Expect gross operating profits and manufacturing figures to influence ahead of 4th quarter GDP numbers due out on Wednesday.

In the 2nd half of the week, the focus will then shift to January trade data and retail sales figures due out on Thursday and Friday.

Expect plenty of sensitivity to the numbers. The markets may need February figures, however, for some early indications of the effect of the coronavirus on trade and consumer sentiment towards the spread of the virus.

The main event of the week, however, is the RBA monetary policy decision on Tuesday. February’s minutes revealed that members had considered a rate cut, which will leave the Aussie Dollar on the defensive. Much will depend on the news wires and the spread of the coronavirus. The RBA is unlikely to consider the impact to just be through the 1st quarter…

If China’s private sector PMI numbers from the weekend are anything to go by…

The Aussie Dollar ended the week down by 1.69% to $0.6515.

For the Kiwi Dollar:

It’s a quiet week ahead on the economic data front. Key stats are limited to building consent numbers for January that will unlikely have an impact on the Kiwi.

We expect market risk sentiment and economic data from key economies, including China’s private sector PMIs from the weekend and Monday to be the key drivers.

The Kiwi Dollar ended the week down by 1.62% to $0.6246.

For the Japanese Yen:

It’s a relatively busy week on the economic calendar. Key stats include 4th quarter capital spending figures on Monday and January household spending figures on Friday.

Barring revision from prelim numbers, February’s finalized manufacturing and service sector PMIs should have a muted impact on Monday and Wednesday.

Outside of the numbers, updates from China and beyond on the coronavirus will remain the key driver.

The Japanese Yen ended the week up by 3.33% to ¥107.89 against the U.S Dollar.

Out of China

It’s a relatively busy week on the economic data front. Key stats include private sector PMI numbers due out on Monday and Wednesday. We expect February’s PMIs to give an early indication of just how badly private sector activity took a hit…

From the weekend NBS numbers for the private sector will likely weigh on risk appetite at the Monday open.

China’s Manufacturing PMI tumbled from 50.0 to 35.7, with the Non-Manufacturing PMI slumping from 54.1 to 29.6.

The only other time that the Manufacturing PMI had sat at sub-40 was back in December 2008.

Outside of the numbers, expect chatter from Beijing and COVID-19 updates to continue to be the main area of focus.

So far so good in China’s containment exercise, though the opening of factories will raise concerns over another breakout.

The Chinese Yuan rose by 0.50% to CNY6.9920 against the U.S Dollar in the week.


Trade Wars: On hold as the world battles the spread of the coronavirus… With the U.S equity markets in corrective territory, will the U.S president look to change the narrative? The handling of the coronavirus as given the Democrats a lifeline. The slide in the equity markets and the clear reliance on China for the demand of U.S goods will be another thorn for Trump to deal with.

UK Politics: The EU and Britain begin trade negotiations, with chatter from both sides likely to have a material impact on the Pound. The two sides sit far apart at the starting point, which can’t be too good for the Pound near-term…

U.S Politics: Bernie Sanders market negative, Bloomberg market positive, Trump the devil we know… Expect Super Tuesday to garner plenty of attention, with 34% of the delegates up for grabs. As Michael Bloomberg enters the race, Tuesday’s outcome will give an idea of who are the front runners to take on Trump and the Republicans…

The S&P 500 Enters Correction, Coronavirus Fear Grows, Consumer Data Still Solid

The U.S. Market Is Down In Early Trading

The U.S. index futures are down hard again in Friday trading. This is the 7th day of decline and puts the major indices deep in correction territory. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all down more than 10% in that time.  The Dow Jones Industrial Average fell nearly 1200 points in Thursday action, its biggest one-day drop on record. This has been the worst week for equities since 2008 and the pain is not yet over.

The sell-off was sparked by the coronavirus and the market’s realization it will have a profound impact on global GDP this year. Yesterday’s warning from Goldman Sachs, that EPS growth would fall to 0% or lower, is the prime example. In virus news, the spread of the virus is not contained. New Zealand and Nigeria have reported their first cases while China and South Korean totals continue to rise. South Korea is now the center of the spread with 500 new cases. China’s epidemic appears to be slowing with only 327 new cases.

The virus is expected to gain a foothold in the U.S. and may already have done so. California reported its first case of community-based transmission and now has roughly 8,500 hundred people under observation.

 Stocks On The Move

Caterpillar is the worst-performing stock in the Dow. The bellwether of global economic activity was down as much as 3.0% in early pre-market trading but cut the losses to only -2.0% by the open of the session. Shares of Apple were also down about 3.0% in early trading while Chevron and Cisco both posted losses near 2.0%. Hard-hit S&P 500 stocks include Norweigan Cruise Lines and American Airlines are moving lower in today’s session and down more than 20% since the broad-market sell-off began.

Paypal is the latest to issue a warning about the virus. The global payments company says revenue will be impacted by the virus because the cross-border activity is slowing. Paypal says revenue will come in at the lower end of the previously stated range and below consensus.

Consumer Data Remains Strong

The day’s economic calendar is topped by the Personal Income and Spending data. The report shows income rose by a larger than expected 0.6% while spending increased only 0.2%. Analysts had been expecting income to rise by about 0.3% and spending the same. Looking in the rearview mirror, the previous month’s income was revised down by 0.1% while spending was revised higher. On the inflation front, PCE prices rose 0.1% last month and are up 1.7% YOY. At the core level, consumer inflation is up 1.6% from last year.

Virus Fears Scuttle Market, EPS Growth In Question, Data Still Holding Up

Equities Fall In Fourth Day Of Viral Rout

The U.S. futures market is indicating another deep decline on Thursday. The move, sparked by a growing fear of the coronavirus, shaved another -1.0% and more off of the major indices. Today’s news includes word of the first community-spread case of coronavirus in the U.S. Health officials in California report the first case in which there is no known trail of contagion. The news raises the stakes in terms of economic impact, if the U.S. shuts down like China and other countries global GDP could contract sharply in 2020.

Elsewhere in the world, China continues to report new cases despite signs its containment efforts are starting to pay off. In South Korea, the second hardest nation, the number of new cases spiked to set a new daily record. The disease is not yet contained in that country. Officials in Japan are taking precautionary efforts and have closed all schools, the number of cases is growing in the EU as well.

Stocks On The Move

Tech is among the days hardest hit. The sector has above-average exposure to China and international markets making it particularly vulnerable to the disease. Apple and Intel are among the days leaders but are not the biggest losers by far. Apple and Intell are both down about -1.5% while chipmakers NVDA and AMD have shed -2.5% and -3.9% respectively.

Microsoft and Goldman Sachs are the latest to issue warnings about the viral impact. Microsoft says it will not meet its Q1 revenue targets because the supply chain is re-ramping slower than expected. Goldman Sachs analysts issued a warning that EPS growth for the entire S&P 500 could come in well below expectations for the year, as low as 0.0% but I think their estimate is generous.

Best Buy issued a Q4 earnings report this morning. The company reports better than expected revenue and earnings that were driven by an increase in comp-store sales. Shares were up sharply following the news but have since given up their gains. Virgin Galactic got a major catalyst from analysts this morning. A double-dose of downgrades from Morgan Stanley and Credit Suisse have shares down more than -13.0%.

The Data Is Good, No Indication Of Weakness

The number of new claims for unemployment insurance climbed 8,000 over the last week but remains low and trending near historic lows. The continuing claims and total claims figures, both indicators of conditions within the broad labor market, were relatively flat over the past week. New orders for durable goods fell -0.20% over the past month. The figure is better than expected and accompanied by a double-digit increase in core capital goods orders. On the GDP front, the final read for 4th quarter GDP is 2.1% and unchanged from the previous estimate.

Equities Attempt Rebound, Coronavirus Spreading, 2020 Growth In Question

The U.S. Futures Edge Higher

The U.S. futures are edging higher in early Wednesday trading following two days of massive declines. The broad market made its biggest drop in over four years over the course of Monday and Tuesday. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all looking at opening gains in the range of 0.10% to 0.15%. Although early action looks bullish, traders are warned not to read too much into the move. The Coronavirus is still spreading and its impact on global economic activity only now being felt.

China reports an additional 406 cases in the overnight session with 52 more dead. South Korea says it has 169 new cases and a rising death toll as does Italy. France now reports its first case proving the virus can spread despite the best efforts of health officials. In the U.S. officials report over 50 cases, they are prepping the public for an epidemic the only questions are when it will start and how long it will last. Regardless, the economic impact of this event will be wide-ranging and long-lasting.

Stocks On The Move

The tech sector is trying to move higher in early trading despite its entering correction territory. Now down 10% from recent highs the sector is on the verge of a full-blown bear market. Shares of Apple are among the leaders, down -12% in the last two days, but up about 0.4% in early action.

Shares of Office Depot are among today’s hottest issues. The company reported better than expected results and positive guidance that lifted shares 5.0%. Shares of TJX, parent of the TJMaxx chains of apparel stores, are up more than 6.15% after it reported better than expected earnings. The company says comps rose 6.0% sparking a similar rise in share prices.

Fast-food retailers Papa John’s and Wendy’s are both moving lower. Both companies reported better than expected results due to strength in the U.S. consumer. the downside is outlook failed to impress and that has investors second-guessing their positions.

Volatility Is On The Rise

The VIX, a so-called “fear gauge”, spiked over the last two days. The index, a measure of options prices relative to the S&P 500, has reached levels above 25 and is fast approaching a two-year high. The index shows a high degree of demand for options, protection against a market downturn, and that spells lower prices for the S&P 500.

On the economic front, New Home Sales are due out later in the session. Sales are expected to rise from the previous month and may top estimates. Warmer than expected weather has had a positive impact on other housing data.


S&P 500 Rebounds, A Correction Is Coming

Equities Up In Early Trading

The U.S. futures are trading higher in the pre-market session although earlier gains have been muted. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all indicated up about 0.15%. The rebound comes a day after the broad market shed more than -3.0% in one of the deepest sell-offs of the last three years. Although the market tends to close higher following sell-offs of this type, traders are warned this correction is not over. Monday’s decline is only the first wave of selling now that the market accepts the coronavirus will hurt global economic activity this year.

The virus is now spreading in areas outside of China. South Korea reports more than 800 infected while Italy and Iran report 7 and 12 deaths each. The very real risk is that global GDP growth will fall below 0% for the first quarter and throw off estimates for the entire year. There have already been a number of downgrades from key S&P 500 companies, expect this trend to accelerate the longer the virus threat persists. South Carolina’s port system is reporting a sharp drop in deliveries that will hurt the state’s revenue this year. Add in the impact to the business supply chain and the threat of economic spillover becomes very real.

Stocks Making Headlines

United Airlines and MasterCard are the latest to issue warnings due to the virus. Both companies say the economic impact will be a drag on full-year revenue. Although business fundamentals are sound, a slowdown in cross-border travel, consumer and business spending is in process. United Airlines is down about -0.40% while MasterCard fell a more robust -2.0%. Chipmaker Micron is also moving lower, down about -1.0%, after it received a downgrade to underperform.

Home Depot is moving higher in early trading. The home improvement company beat on the top and bottom lines. The company CEO says investments in the company’s future are paying off. Shares are up 3.0%. Shares of Moderna are also on the move, up more than 15%, after the company shipped a coronavirus vaccine for Phase 1 trial. Moderna uses RNA technology to force human bodies to create their own medicines.

Economic Data Is Sparse

Today’s economic calendar is sparse. The only major release for U.S. markets is the Consumer Confidence figures due out later today. With the coronavirus weighing on global outlook this data will be more important than ever. The consumer has long been a driver of the U.S. economy, if cracks begin to appear the market correction could gain momentum.

Equities Plunge, Coronavirus Spreads, A Major Correction Has Begun

The U.S. Futures Are Down Sharply In Early Trading

The U.S. futures market is down sharply in early trading. Market participants have begun to understand the scale of disruption the spreading coronavirus will have on economic activity. The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite are all down -2.5% to -2.75% in early trading.

The cause, news the coronavirus is not only spreading but gaining traction in areas outside of China. South Korea says the number of cases there has jumped to over 750. South Korea’s response was to raise its safety warning to the highest level. Elsewhere, the number of infected is growing in Italy and Iran. China says the number of deaths has topped 2,500 within its own borders. The last estimates for Q1 growth were near 0.0% due to viral impact but the risk is much greater. First-quarter growth is likely to come in below zero and the rebound expected later in the year is highly questionable.

Stocks On The Move

Oil and gold are among today’s biggest movers. Oil prices fell nearly -4.0% because spreading economic impact means declining demand or oil. Today’s move confirms resistance at a key technical level and may point the way to deeper declines later this quarter. Gold prices shot up nearly 2.0% and are headed up to retest the all-time high. Traders around the world are flocking into safe havens and are likely to drive the precious metal to new highs very soon.

Airlines, gaming, and travel stocks are leading equities lower. Shares of Las Vegas Sands, Wynn Resorts, and MGM are down -3 to -7.0%. Delta and American Airlines are both down about -5.25%. Chipmakers are not immune, Nvidia and Intel are both down as well, Nvidia leads with a loss of -6.0%. Apple and its supply chain are also being hit hard with losses in the range of -4.0% to -6.0%.

The U.S. Economy Is Still Strong

Words of encouragement from Warren Buffet did not assuage the market’s anxiety. He says the U.S. economy is still on fine footing and the data supports that view. Today’s economic calendar includes the Chicago National Activity Index which rose in January. The index came in at -0.25 from last month’s -0.51 showing an increase in overall activity and activity in line with long-running trends. Three of the four sub-indices improved but only one turned positive, the new orders. Traders should focus on new orders because it is a leading indicator of future activity.

Equities In Retreat, GDP Growth In Danger, Fed Downplays Rate-Cut Outlook

The U.S. Futures Are Moving Lower

The U.S. futures are indicating a mildly lower open on Friday. The move comes a day after U.S. equity markets experienced an unexpected and deep intraday pullback. The pullback, most likely caused by a growing fear of the coronavirus, countered a new all-time high in the broad market and threatens to spark a deeper correction. The number of deaths in China has risen in the last 24 hours and signs are emerging the virus is still spreading. China now reports outbreaks within its prison system while South Korea says its confirmed cases are spiking.

Traders are becoming more and more concerned about 1Q GDP and EPS growth. The consensus is the virus will hold GDP growth at 0.0% for the 1st quarter and that will assuredly have an impact on Q1 EPS growth. Looking at the Chinese data, sales of autos fell more than 92% in the first two weeks of February signaling the impact on economic activity could be quite severe. The good news is that, once the epidemic has passed, GDP and EPS growth are expected to rebound.

Wall Street Is Still Bullish On Domestic Equities

In corporate news, earnings and upgrades are the news of the day. On the earnings front, Deere & Co, First Solar, and Dropbox are the big movers of the day. Deere & Co reported better than expected top and bottom-line results that pleased investors. The news was accompanied by a favorable outlook for the U.S. farming market that has shares up 10.5% in premarket action. Shares of Dropbox are also moving higher, up 12.5%, after it reported better than expected results. The file-sharing company also raised guidance and initiated a share buyback program.

Shares of Chewy got a boost this morning when analysts at RBC upped their rating on the stock. According to them, Chewy has highly favorable risk-reward profile based on revenue and margin expansions. At the other end of the spectrum, shares of First Solar are moving lower following its weaker than expected report and unfavorable guidance. In other news, shares of Coca Cola are holding flat after the company warned Q1 EPS could be hurt as much as $0.02 per share due to the coronavirus outbreak.

Flash PMI And Existing Home Sales Due Out Late In The Morning

Flash PMI readings and Existing Home Sales data are due out later in the morning. The PMI, both manufacturing and services, are expected to hold steady if not advance from the last month. Readings on activity in NY and Philadelphia were both much hotter than expected earlier this week. On the housing front, existing home sales are expected to fall slightly from the previous month but remain above 5 million annualized units.

Equities Fall, Risk of Correction Grow, Oil Prices In Reversal

The U.S. Futures Are Down In Early Trading

The U.S. index futures are pointing to a lower open in the Thursday session. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all down about -0.15%. Traders are cautious after the S&P 500 hit a new all-time due to the increased risk of a virus-related market correction. China reports the number of confirmed cases has topped 74,500 with 2118 dead on the mainland. South Korea reports that its cases are spiking despite containment efforts across the region.

A number of companies have issued revenue warnings because of the virus impact on global trade. Today’s news includes statements from air-carrier Air France and global shipping giant Maersk. Air France describes the impact as “brutal” while Maersk told its investors volumes and traffic will be significantly lower than expected.

Investment banker Goldman Sachs says the market is underestimating the fallout from the epidemic and I think they are right. At current levels, the S&P is trading nearly 19X forward earnings with consensus estimates in decline. At the current pace of decline, the 1st quarter earnings cycle will most likely result in negative EPS growth for the broad market.

Domino’s Surges On Results, Dividend And Guidance

In earnings news, shares of Domino’s Pizza are up nearly 20% after the delivery company reported earnings. EPS and revenue were well above the consensus estimates, the company issued a favorable outlook for the coming year and raised the dividend. Shares of Stamps.com are also on the move, gaining more than 35% after reporting solid revenue and earnings this morning.

At the other end of the spectrum, ViacomCBS and Aaron’s are both moving lower. ViacomCBS reported merger expenses were dragging on results and that sent shares down by -8.0%. Aaron’s, a rent-to-own furniture and electronics chain, reported mixed results and saw its shares move lower as well.

Economic Data Comes In Strong

The day’s economic data came in strong and suggests the market is wrong about FOMC policy. Initial claims came in at 210,000 and as expected. Initial claims are trending at historical lows and are consistent with healthy labor markets. Continuing claims and total claims also fell in this week’s data.

On the manufacturing front, the Philadelphia Federal Reserve’s MBOS came in much hotter than expected. The headline figure rose 20 points to 36.7 and a three-year high. Data within the report shows new orders, deliveries, backlogs, and employment all rose. The Empire State Manufacturing Survey is equally strong indicating a vigorous rebound in U.S. manufacturing this year.


Equities Rebound, Adidas Warns China Business Suffers, Housing Data Is Hot

The U.S. Futures Are Higher In Early Trading

The U.S. futures are moving higher in early Wednesday trading. The NASDAQ Composite advanced 0.50% to lead the market while the Dow Jones and S&P 500 both advanced 0.30%. The moves are driven by a round of better than expected earnings and dubious sign the spread of coronavirus in China is slowing. On the health front, Chinese officials report over 100 new deaths bringing the total to over 2,000. The number of new cases slowed from the previous day but still topped 1,000 infected.

The risk for markets remain despite the slow reopening of China’s industrial centers. In today’s news, shoe-maker Adidas reported its business in China was down more than 85%. Because China is a major manufacturing hub for the world’s shoe suppliers this could impact Adidas revenue in the coming quarters. Shares of the stock, listed on the OTC market board, are flat in the premarket.

Earnings Surprises Lift Market

A round of better than expected earnings is helping to lift sentiment in early trading. Shares of Garmin, Analog Devices, Genuine Parts Company, and Sonic Automotive are all moving higher following the release of their reports. Analog Devices is in the lead with an advance of 5.0%. The company reported a narrow miss on the top line but smashed consensus targets for EPS. Analog Devices also provided better than expected guidance adjusted for the impact of coronavirus.

Shares of technology-maker Garmin are up 4.5% in the premarket. It beat on the bottom line and raised full-year guidance. Sonic Automotive beat on the top and bottom line sending its shares up more than 3.5%. The only negative in this report is the company did not raise its dividend as expected. In other news, shares of Nvidia are also moving higher following Bernstein’s upward revision to its price target.

Economic Data Is Hot

Today’s economic data is hot. The headline Housing Starts number is negative but comes with many caveats for traders to consider. The first is that analysts had expected a decline of -11% so -3.6% is quite a beat. The second is that January’s figure was a blow-out so a little give-back isn’t bad. The third caveat for traders is that January’s figure was revised up to 17.7% leaving the YOY gains firmly in positive territory.

On the inflation front, PPI came in hot at the headline and core levels. Headling PPI rose 0.5% over the last month and is up 2.1% YOY. This is in-line with the FOMC’s view that current policy is appropriate. Traders looking for a dovish sound FOMC in today’s minutes may be disappointed. The FOMC minutes are due out this afternoon at 2 PM.

Apple Guides Lower, Coronavirus Still Spreading, U.S. Equities Fall

The U.S. Futures Are Lower In Early Trading

The U.S. futures are pointing to a lower open on Tuesday following a revenue warning from Apple. Apple says it is going to miss its previously stated guidance of $63 to $67 billion for the 1st quarter. The reason is the coronavirus. The world’s leading manufacturer of consumer electronics says production and sales are taking a hit in China. With production slowing sales will be impacted around the world. Shares of Apple are down about -2.5% in early trading after shedding more than -3.0% in the overnight session.

The Dow Jones Industrial Average is down about -0.55% while the S&P 500 a smaller -0.41%. The tech-heavy NASDAQ Composite with its exposure to China is leading with a loss of -0.60%. This week is a holiday-shortened week, today’s action is the first since the market closed last Friday. On the coronavirus front, China has announced another 1900 new cases and nearly 100 deaths. Among the dead are healthcare workers and the head of a major treatment center. In total, there are 72,350 cases worldwide and the number continues to grow. The full impact on the global economy will not be known for many months so traders should be cautious.

Earnings Season Still In Full Swing

With nearly 80% of the S&P 500 reports in the bag, the earnings season is winding down. Even so, there are still a number of market-moving releases left to come. Today’s news includes reports from Walmart, Advance Auto Parts, and Bloomin Brands. The results for all three are mixed.

Walmart reported a miss on the bottom line along with weaker than expected comps. The stock fell -1.0% on the news and then rebound to advance 1.0% before the open of the day’s session. The consumer giant raised its dividend and provided a stable outlook which was enough for the market. Advance Auto Parts also reported mixed results. The after-market auto parts store missed on the top line but delivered a solid bottom-line beat. Shares are up 2.0%, partially driven by a 300% increase to the dividend.

Economic Data Is Positive

The Empire State Manufacturing Survey came in hotter than expected. The headline reading of 12.9 is 8 points higher than the previous month. An uptick in new orders and shipments are the primary drivers although employment, backlogs, and delivery times all rose too. Later in the session traders will be watching for the homebuilder’s sentiment index due out at 10 AM. The most important read of the week will be tomorrow afternoon when the FOMC releases the minutes from the last meeting.

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.

Equity Futures Plunge, Coronavirus Spread Accelerates, Earnings Still In Focus

The Futures Are Down In Early Trading

The U.S index futures are down in early trading following news out of China. China revealed the number of new cases of coronavirus surged by 15,000 overnight, primarily due to a new clinical test. The number of deaths also surged, up 254 since yesterday, raising the stakes in terms of potential for global economic impact.

With China’s manufacturing hub of Hubei province shut down, it is certain the world’s supply chain will feel the effects of this outbreak for months to come. The tech-heavy NASDAQ Composite, with its heavy exposure to China and Asia, is in the lead with a loss of -0.95% while the Dow Jones and S&P 500 are both down about -0.80%.

Earnings Are Still In Focus

In stock news, a raft of corporate earnings came out this morning including reports from Cisco, Pepsi, AIG and Applied Materials. Cisco is the headline of the day. The company reports another decline in revenue and a shortfall compared to estimates that have the stock down more than -5.0% in early trading. Shares of Pepsi are edging higher in the early morning session. The global supplier of beverages and snacks beat revenue estimates on better than expected organic sales growth.

Shares of AIG are among the days winners. The stock reported a return to underwriting profit growth and sent the stock up more than 2.0%. Shares of consumer staple Kraft are edging lower in the early session after reporting mixed earnings. The company fell short on revenue due to a decline in organic sales but beat on the bottom line. Shares are down about -0.40% on the news. In other stock news, shares of Tesla are moving lower by 4.0% after hitting all-time highs in the last week. The company revealed plans for a $2 billion stock offering that is going to greatly dilute shareholder value.

The Economy Is Still In Good Shape

Today’s economic data confirms the message sent to Congress by Fed Chief Jerome Powell; the economy is still in good shape. On the labor front, the jobless claims figures fell by -2,000 to 205,000 and remain near historic-low, consistent with healthy and tight labor conditions. On the inflation front, CPI came in at 0.1% and a tenth shy of expectations. At the core level CPI rose 0.2% and as expected while the YOY comparisons came in at 2.5% and 2.3%.

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.



Equities Rise, Coronavirus Fears Ease, China GDP Growth In Peril

The U.S. Indices Edge Higher In Early Trading

The U.S. futures market is edging higher in the early premarket session as traders continue to monitor the coronavirus situation. The S&P 500 is lagging in today’s action, up only 0.30%, while the Dow Jones Industrial Average and NASDAQ Composite are both up about 0.45%.

Today’s moves come just a day after the broad market set a new all-time high despite concerns the coronavirus outbreak will drag on global GDP growth. China confirms the number of deaths has risen to 1016 with more than 42,600 infected. The WHO reports the number of new cases is at its lowest levels since the first weeks of the outbreak showing the rate of spread is slowing.

In stock news, shares of Under Armor are down -11.0% after the company disappointed investors. Revenue and earnings were more or less in line with consensus but guidance a was weak where competitor Lululemon has raised its guidance twice since last reporting. Shares of Autonation are up 9.0% after it reported better than expected results. Sales of new cars were flat from last year but sales of used cars jumped 12.5% to drive profits and improving margins.

EU Indices Move Higher At Midday

The EU equity indices are moving higher despite concerns China’s viral outbreak will drag on GDP. China is a vital step in the global supply chain, any disruption to shipments and deliveries is going to cause a chain reaction throughout the economy. The DAX is in the lead with a gain of 0.88%, the FTSE is up 0.80% and the CAC is trailing at 0.42%.

In stock news, shares of Geely and Volvo are both moving higher after the two announced a merger. The combined company will be listed on both EU and Hong Kong exchanges. Shares of Daimler are down -1.0% after the company reported an unexpected loss.

Asia Moves Higher Despite GDP Warning

Asian equity indexes finished the day higher despite a warning about GDP. Economist expect the coronavirus outbreak to shave at least 1.0% from 2020 GDP and the figure is sure to move higher. While there has been some news about reopening businesses much of China’s economy remains closed. The Hong Kong Hang Seng led today’s move with a gain of 1.26%, the Kospi comes in second with a gain of 1.00%. Others in the region advanced 0.40% to 0.65%, Japan was closed for a holiday.

Global Markets Edge Lower, Coronavirus Fears Linger, Chinese Inflation Spikes

The U.S. Market Is Mostly Flat In Early Trading

The U.S. market is mostly flat in early trading as investors fret over the spreading coronavirus. The number of infected has risen to 40,170 while the death toll exceeds that of SARS. Over the weekend, Chinese President Xi Jinping pledged his country to fight the disease and that lent some support to the equities market. The Dow Jones Industrial Average is leading the losses down -0.12%. The S&P 500 and NASDAQ Composite are both down about half that amount.

In stock news, attention is focused on the potential economic impact of the coronavirus outbreak. Chinese factories are supposed to reopen on Monday but the announcement may be more symbolic that not. Most businesses are expected to remain shuttered and may disrupt the global supply chain. The province of Hubei, where the virus originated from and the most heavily hit, is a major manufacturing center.

Restaurant Brands, the owner of Popeyes, beat on the top and bottom lines. The company’s so-called “chicken” war with Wendy’s and Bojangles helped pad the company’s results. Shares are up 2.0% in the premarket. Shares of Allergan are also moving higher in the early session after it beat on the top and bottom line.

EU Equities Move Lower

The EU equities market is moving lower at midday. The coronavirus and its impact to global supply chains is the primary reason. The CAC is down about -0.45% while the DAX and FTSE trail with losses of -0.38% and -0.28%. With China as its biggest trading partner, the EU is especially vulnerable to disruptions within the Chinese economy.

In stock news, embattles NMC Health is moving higher after it revealed approaches from two private equity firms. The company is still ensnared with a legal battle versus short-sellers claiming bad accounting practices. In other news, people close to NMC are under review for misreporting their disclosures. Shares of Daimler are flat at midday after the company announced job cuts and other cost-saving efforts. Exor is moving higher by 5.5% after it announced the possible divestiture of PartnerRE.

Asia Mostly Lower, Virus Causes Inflation To Surge

Asian markets are mostly lower at the end of Monday’s session. The Nikkei and Hang Seng are both down -0.60% while the Kospi and ASX post smaller losses. The mainland Shanghai Composite is the only index in the green, up 0.51%, after sentiment was buoyed by Xi’s pledge. On the economic front, Chinese CPI surged to 5.4% YOY and set a long-term high. The surge is due in part to the virus as well as high pork prices.