Closing Stock Market Summary
The stock market sold off more than 3% on Monday following a surge in coronavirus cases outside China, including South Korea, Italy, and Iran. The Dow Jones Industrial Average (-3.6%), S&P 500 (-3.4%), and Russell 2000 (-3.0%) each turned negative for the year, while the Nasdaq Composite (-3.7%) gave up most of its monthly gains.
Governments took swift action to help contain the outbreak, such as closing public spaces, but weakness in foreign equity markets reflected concerns about the possibility of a global pandemic. South Korea's Kospi fell 3.9%, and Italy's MIB fell 5.4%. China's Shanghai Composite declined just 0.3% amid reports that the rate of new coronavirus cases may have peaked in the region.
The World Health Organization (WHO) said that the drop in infections in China is "real" due to Beijing's aggressive approach. It remained unclear, however, if the virus would continue to worsen in a way that further impedes economic activity that consequently hurts earnings prospects.
In turn, de-risking efforts were widespread with all 11 S&P 500 sectors finishing in negative territory, including seven that dropped at least 3.0%. The energy (-4.7%), information technology (-4.2%), and consumer discretionary (-3.5%) sectors led the retreat, while the utilities sector (-1.2%) declined the least.
Technology and travel stocks, such as Advanced Micro Devices (AMD 49.12, -4.16, -7.8%) and American Airlines (AAL 25.45, -2.37, -8.5%), sold off on concerns that their businesses would be hurt by the coronavirus. Many health care names like UnitedHealth (UNH 277.79, -23.64, -7.8%) were additionally pressured by Senator Bernie Sanders (I-VT) decisively winning the Nevada caucuses.
Away from equities, investors continued to seek safety in gold ($1676.70/ozt, +27.80, +1.7%) and U.S. Treasuries given the growth concerns and weakness in stocks. Hedging interest against further downside was also on full display by the 46.6% surge in the CBOE Volatility Index (25.03, +7.95).
The 2-yr yield and the 10-yr yield fell nine basis points each to 1.26% and 1.38%, respectively. The U.S. Dollar Index finished flat at 99.30. WTI crude dropped 3.9%, or $2.09, to $51.25/bbl.
Separately, Newmont Goldcorp (NEM 50.26, +0.82, +1.7%) and Gilead Sciences (GILD 72.90, +3.20, +4.6%) exhibited relative strength throughout the day. Newmont set a 52-week high amid the continued strength in gold prices, while Gilead benefited from an acknowledgement from WHO that its Remdesivir drug is the only drug that appears to be effective in treating the coronavirus.
Investors did not receive any economic data on Monday. Looking ahead, investors will receive the Conference Board's Consumer Confidence Index for February, the FHFA Housing Price Index for February, and the S&P Case-Shiller Home Price Index for December on Tuesday.
- Nasdaq Composite +2.8% YTD
- S&P 500 -0.2% YTD
- Dow Jones Industrial Average -2.0% YTD
- Russell 2000 -2.4% YTD
After Hours Summary: KEYS +7%, HPQ +5%, INTU +2.7% are higher, while PANW / EVER -14%, SHAK -13% are lower following earnings, MA weighing on peers
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: MMSI +10.5%, ITRI +7.6%, PROS +7.4%, KEYS +7.1%, RCII +5%, HPQ +4.9% (also announces strategic and financial value creation plans; increases total share repurchase authorization to $15 bln), INTU +2.7% (also announces plans to acquire Credit Karma for $7.1 bln), RTRX +2.7% (light volume)
Companies trading higher in after hours in reaction to news: MRNA +15.4% (confirms that it has released the first batch of mRNA-1273, its vaccine against the novel coronavirus), PRGO +3.4% (still looking around;FDA granted approval of this generic albuterol sulfate inhalation aerosol to Perrigo Pharmaceutical before the open), XRX +2.9% (following HPQ earnings / strategic and financial value creation plans), REGN +1.1% (upgraded to Outperform from In-line at Evercore ISI), LYFT +0.7% (CFO disclosed the purchase of 22.5K shares worth more than $1 mln)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: PANW -14%, EVER -13.6%, SHAK -13.1%, KTOS -11.4%, CLVS -8.6%, TNDM -6.3%, GH -5.7%, BSM -4.7%, HTZ -4.6%, CDEV -3.4%, MA -2.9% (updates first-quarter and full-year 2020 net revenue outlook based on the impact of the Coronavirus), XNCR -1.9% (light volume)
Companies trading lower in after hours in reaction to news: EXAS -7.6% (announces public offering of $850 mln aggregate principal amount of convertible senior notes due 2028), VNET -1.8% (announces agreements for private placement of US$100 mln aggregate principal amount of convertible notes)
MasterCard (MA) guidance weighing on credit card and payment processing peers: V -2.4%, PYPL -1.6%, AXP -1.2
Gapping downBriefing note - With US futures down 2.5-3% in pre-market, most stocks are trading lower. The following represents a snap shot of sectors and names with identified catalysts
Gapping down
In reaction to disappointing earnings/guidance:
- CRI -9.7%, DORM -4.9%, BRK.B -3.7%, SPNS -2.2%, EPZM -1.9%, AWI -1.4%, STAR -0.7%
Select sectors showing weakness:
- SMH -4%, XLK -3.5%, XLE -3%, QQQ -2.8%, XLF -2.8%, IWM -2.7%, DIA -2.7%, XLY -2.7%, SPY -2.5%, XLI -1.9%
Select travel related names showing early weakness:
- CCL -6%, AAL -5.1%, DAL -5%, RCL -4.5%, UAL -2.9%
Other news:
- CEL -7.6% (Chairman Ami Erel resigns, effective March 1; no updates on replacement at this time)
- CRON -5.6% (announces that it will delay its 2019 fourth quarter and full-year earnings release and conference cal)
- JCAP -4.4% (Jernigan Capital lowers quarterly dividend to $0.23/sh from $0.35/sh)
- TECK -3.8% (announced it is withdrawing the Frontier Project from the regulatory review process)
- TCOM -3.7% (reschedules Q4 release to March 18 after the close due to the evolving situation brought on by the novel coronavirus outbreak in China)
- BB -3.2% (files for 4,182,189 share common stock offering by selling shareholders)
- EBAY -1.5% (issues on statement regarding the previously announced strategic review of its Classifieds Group)
Analyst comments:
- GLPG -8% (downgraded to Underperform from Neutral at BofA/Merrill)
- W -6.4% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
- ACB -6% (downgraded to Market Perform from Outperform at Cowen)
- TLRY -6% (downgraded to Market Perform from Outperform at Cowen)
- COMM -4.5% (downgraded to Hold from Buy at Deutsche Bank)
- A -4.4% (downgraded to Hold from Buy at Needham)
- NCLH -4.2% (downgraded to Hold from Buy at Argus)
- FSLR -3.9% (downgraded to Underperform from Buy at BofA/Merrill)
Global Times tweets: China Auto sales will fall 90% in February, 60% in March and 40% in April, an industry insider said - The auto industry has been disrupted by weakened buying power and factory closures amid the COVID19 outbreak
Gapping up
In reaction to strong earnings/guidance:
- EXK +6.4%, CTB +1.8%, XENT +0.7%, KOS +0.6%
Select metals/mining stocks trading higher:
- HMY +11.6%, GFI +8%, AUY +6.4%, AU +5.7%, GOLD +5.4%, IAG +4.5%, PAAS +4.5%, AG +4.4%, GDX +3.8%, GLD +2.3%, SLV +1.5%, .
Other news:
- CFRX +11.6% (granted Breakthrough Therapy designation by FDA to exebacase for the treatment of MRSA bloodstream infections including right-sided endocarditis including anti-staphylococcal antibiotics in adult patients)
- SENS +7.6% (Soros Fund Management discloses 5.09% passive stake)
- UTHR +6.6% (Tyvaso meets primary and all secondary endpoints)
Analyst comments:
- NEM +5.7% (upgraded to Sector Outperform from Neutral at CIBC)
- PBA +0.5% (upgraded to Overweight from Equal Weight at Wells Fargo)
Early premarket gappers
- Gapping up:
- SENS +11.1%, HMY +10.9%, GFI +7.8%, AUY +6.9%, IAG +5.8%, AU +5.7%, PAAS +4.6%, GOLD +4.3%, NEM +3.6%, EXK +3.4%, GDX +3.3%, AG +3.2%, GLD +2.2%, SLV +1.4%
- Gapping down:
- KOS -11.3%, JCAP -5.3%, CCL -5.2%, CRI -4.3%, RCL -4.1%, AAL -4%, DAL -3.8%, TCOM -3.8%, XLK -3%, BRK.B -2.8%, XLE -2.6%, XLF -2.5%, XLY -2.5%, QQQ -2.4%, DIA -2.4%, IWM -2.3%, SPY -2.2%, XLI -1.9%, EPZM -1.9%, BB -1.5%, UAL -1.4%