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Fly Intel - End of Day Brief - Friday Feb 7, 2020

Stocks end lower as companies react to coronavirus fears

The S&P 500 snapped its four-day winning streak despite, or possibly due to, the stronger than expected monthly report on the U.S. job market. It could be the case where today reflected a "good news is bad news" case where the strong jobs report was read as a sign that the Fed may be less likely to add more accommodation to the market. Additionally, the Federal Reserve has warned that the coronovirus outbreak poses a “new risk” to the economic outlook and the fallout for companies is starting to come into greater focus. Still, even with today's pullback in the benchmark index, the S&P saw healthy gains on a weekly basis after the market spent the prior four days recovering from the coronavirus jitters that had prompted last week's sharp selloff.

ECONOMIC EVENTS: In the U.S., nonfarm payrolls increased 225,000 in January, which was much better than consensus expectations. The unemployment rate edged up to 3.6% from the 50-year low of 3.5%. Average hourly earnings rose 3.1% year-over-year last month. Wholesale sales dropped 0.7% in December, while inventories fell 0.2%. In energy news, Baker Hughes reported that the U.S. rig count is unchanged from last week at 790, with oil rigs up 1 to 676, gas rigs down 1 to 111.

TOP NEWS: Uber (UBER) shares jumped 9.5% following the company's report last night of better than expected revenue and lower losses than were forecast in the fourth quarter. Of note, Uber management now expects the company to become EBITDA profitable by the fourth quarter of 2020, accelerated from a prior forecast for profitability in FY21.

Apple supplier Foxconn (HNHPF) told workers at its Shenzhen plant in China not to return to work when the extended Lunar New Year break ends February 10, Bloomberg reported. Later in the day, Bloomberg added that Apple has extended its retail store closures in China due to the coronavirus. The company originally planned to open its retail stores on February 10 but now sees the reopenings occurring between Feb. 13 and Feb. 15.

Meanwhile, Reuters reported that Honda Motor (HMC) will keep operations at its vehicle plants in Wuhan, China, suspended through February 13 and that production at all of Toyota's China plants will remain suspended through February 16 due to supply chain issues as the coronavirus spreads.

Credit Suisse (CS) announced that its board has accepted the resignation of Tidjane Thiam as CEO. Thiam previously had said that Swiss newspaper reports claiming that he had ordered a search for incriminating material against a former executive at the bank were "entirely false and defamatory," but he will now be exiting the bank, whose board appointed Thomas Gottstein as Group CEO in his place.

In other executive change news, Ford Motor (F) announced that Jim Farley has been named Chief Operating Officer, reporting to president and CEO Jim Hackett. Ford also announced that Joe Hinrichs is retiring as Ford's president of Automotive after 19 years at the company.

In M&A news, FGL Holdings (FG) announced a deal to be acquired by Fidelity National Financial (FNF) for $12.50 per share, representing an equity value of approximately $2.7B.

Meanwhile, Intelsat (I) shares were volatile during the afternoon after the Federal Communications Commission announced the items on the tentative agenda for the February Open Commission Meeting scheduled for Friday, February 28. Along with that announcement, the FCC included a C-Band Rules document that included the accelerated relocation payments that the FCC would make available for each of the five eligible operators under Chairman Ajit Pai's proposal.

Additionally, Mondelez (MDLZ) was in focus after it disclosed a European Commission probe into practices restricting cross-border trade.

MAJOR MOVERS: Among the noteworthy gainers was AbbVie (ABBV), which rose 6% after reporting quarterly results and providing guidance for the first quarter and fiscal 2020. Also higher after reporting quarterly results were Synaptics (SYNA), Pinterest (PINS), and Activision Blizzard (ATVI), which gained a respective 20%, 9.5%, and 2%.

Among the notable losers was Zogenix (ZGNX), which plunged 40% after it reported data from its Phase 3 clinical trial in Lennox-Gastaut syndrome that Guggenheim analyst Yatin Suneja called "underwhelming." Also lower were Myriad Genetics (MYGN), Manitowoc (MTW), and Take-Two (TTWO), which fell 28%, 15%, and 12%, respectively, after reporting quarterly results.

INDEXES: The Dow fell 277.26, or 0.94%, to 29,102.51 , the Nasdaq dropped 51.64, or 0.54%, to 9,520.51 , and the S&P 500 dipped 18.07, or 0.54%, to 3,327.71.


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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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