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Fly Intel - End of Day Brief - Friday Jan 31, 2020

Stocks close out bad week with down day as coronavirus fears linger

Stocks had their worst week since August, with the S&P 500 dropping about 3% from its all-time high on January 17 and erasing its 2020 advance, as the count of patients infected with the Wuhan coronavirus has now climbed above 10,000. While two of the largest oil producers in the world slid following their quarterly reports, Amazon (AMZN) was a standout on the upside as the stock surged following blowout results from the e-commerce giant.

ECONOMIC EVENTS: In the U.S., personal income rose 0.2% in December, with a 0.3% increase in spending. The Chicago PMI dropped 5.3 points to 42.9 in January. The University of Michigan consumer sentiment survey rose to an 8-month high of 99.8 in the final January print, up from 99.1 in the preliminary reading for this month and from 99.3 last month. In energy news, Baker Hughes reported that the U.S. rig count is down 4 rigs from last week to 790, with oil rigs down 1 to 675, gas rigs down 3 to 112.

In other news, the New York Daily News reported there was a scare that New York City "may have its first confirmed case of the coronavirus." Following the report, NYC Health Commissioner Oxiris Barbot said the report was inaccurate and that there are still "zero" confirmed cases of the novel coronavirus in NYC.

TOP NEWS: Amazon was one of the bright spots in an otherwise down day for the market as the e-commerce giant's shares raced 7.4% higher following its report of strong results for the holiday quarter.

On the not as bright side after earnings, Caterpillar (CAT), Exxon Mobil (XOM) and Chevron (CVX) all traded lower on the heels of their reports. The heavy machinery maker fell almost 3% after it gave a downbeat forecast for 2020, saying that it expects "continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories." Meanwhile, Exxon chairman and CEO Darren Woods said his company's "operations performed well," but its stock slid 4.1% following the earnings release. Chevron, which reported better than expected profits but revenue that came in below the consensus forecast, closed 3.8% lower.

IBM (IBM) shares rose 5.1% after Big Blue announced that Arvind Krishna will take over as CEO of the company and that Virginia Rometty will transition into the role of Executive Chairman of the Board. In other, less well received management change news, shares of WWE (WWE) plunged on Friday after the company announced what was called the "sudden and fairly unexplained" removal of its co-presidents.

In M&A news, Volkswagen (VWAGY) last night announced that its Traton unit offered to acquire all of the outstanding shares of common stock of Navistar International (NAV) not already owned by the company at a price of $35 per share in cash. In doing so, Traton's release also stated that the company "would not, in its capacity as a stockholder, support an alternative transaction," leading Baird analyst David Leiker to state that another buyer "seems unlikely."

In coronavirus news, multiple U.S. airlines announced the temporary suspension of flights to mainland China given the outbreak of the virus. United Airlines (UAL) and American Airlines (AAL) have suspended flights to the Chinese mainland through March 27, while Delta (DAL) said it is temporarily suspending all flights between the U.S. and China through April 30.

MAJOR MOVERS: Among the noteworthy gainers was Adient (ADNT), which rose over 33% after it reported quarterly results and announced an agreement to sell a 30% stake in YFAI to Yanfeng for $379M. Also higher after reporting quarterly results were Deckers (DECK) and Colgate-Palmolive (CL), which gained a respective 7.6% and 6.2%.

Among the notable losers was Luckin Coffee (LK), which dropped 10.7% after Muddy Waters announced a short position on the stock and shared a report alleging fraud that it views as "credible." Also lower were Amgen (AMGN) and Electronic Arts (EA), which fell 4.5% and 3.3%, respectively, after reporting quarterly results.

INDEXES: The Dow fell 603.41, or 2.09%, to 28,256.03, the Nasdaq lost 148.00, or 1.59%, to 9,150.94, and the S&P 500 declined 58.14, or 1.77%, to 3,225.52.


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Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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