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Jan. 29, 2020, 4:41 p.m. EST

Stocks end mixed, with earnings reports offset by lingering coronavirus worries

Fed leaves interest rates unchanged, sees moderate U.S. economic growth

By Chris Matthews, MarketWatch , Clive McKeef


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Apple shares were in rally mode after “blowout” fourth-quarter results.

Stocks ended little changed Wednesday, giving back intraday gains, with better-than-expected results from blue-chip names, including Apple, offset by lingering concerns related to China’s coronavirus outbreak.

The Federal Reserve left its policy interest rate unchanged as expected and said the economy is growing at a moderate pace, but Fed Chairman Jerome Powell acknowledged that the coronavirus epidemic in China introduces “uncertainty” into the outlook and also called asset valuations “somewhat elevated.”

What did major indexes do?

The Dow Jones Industrial Average  (DOW:DJIA) rose 11.60 points, or 0.4%, to end at 28,734.45, while the S&P 500 index  (S&P:SPX) slipped 2.84 points, or 0.1%, to 3,273.40. The Nasdaq Composite Index (AMERICAN:COMP) advanced 5.48 points, or 0.1%, to finish at 9,275.16.

The Dow on Tuesday rose 187.05 points, or 0.7%, to end at 28,722.85, snapping a five-day losing streak and taking back a chunk of the previous session’s decline, which was the steepest one-day fall since October. The S&P 500 which has also suffered its biggest one-day drop since October on Monday, rose 32.61 points, or 1%, to finish at 3,276.24. The Nasdaq Composite closed at 9,269.68, up 130.37 points, or 1.4%.

What drove the market?

Stocks struggled to recover more of the ground lost during Friday and Monday’s selloff sparked by fears a coronavirus epidemic in China would slow global economic growth. By Wednesday there were about 6,000 confirmed cases, and the death toll had risen to 132.

See: As infections reach 6,000, here’s how the illness has spread across the world so rapidly

Investors in U.S. stocks were encouraged by a slew of corporate earnings reports led by Dow component Apple Inc . (NAS:AAPL)   which rose to a record high at $327.25 intraday, before closing up 2% at $324.34. The phone maker reported its second-best quarter for iPhone sales in the company’s history late Tuesday.

See : Analysts divided on how much further Apple shares can climb after ‘blowout results’

“Who cares about a potential global pandemic when Apple reports results like that?” wrote Paul Hickey of Bespoke Investment Group in a Wednesday note.

So far, nearly 25% of S&P 500 companies have reported results for the previous quarter. Of those companies, nearly 72% have beaten analyst expectations, FactSet data shows.

“The current view is that earnings will be up around 10% in 2020, but early-in-the-year estimates generally come down as the year wears on,” Byron Wien, vice chairman for private wealth solutions, at Blackstone, wrote in an annual outlook note.

“Geopolitical uncertainty and the twists in the outlook for the presidential election should create several market corrections of 5%, but none greater than 10%,” he added. “While the economic environment is not particularly strong, investors will become comfortable that the longer-term outlook remains favorable, albeit subdued,” he said.

The Federal Reserve held its benchmark fed funds interest rate steady in a range between 1.5% and 1.75%. on Wednesday, as expected, saying the economy remained on a moderate growth path.

In economic data, the U.S. trade deficit rose 8.5% in the fourth quarter, the Commerce Department said Wednesday.

The National Association of Realtors said its index of pending home sales fell 4.9% in December from the previous month.

See also : The U.S. economy probably grew a ho-hum 2% in the fourth quarter, but there might a few surprises

Which companies were in focus?

Boeing Co . (NYS:BA)  reported a surprise loss for the fourth quarter and revenue that declined below analyst expectations amid the company’s struggles linked to the extended grounding of its 737 Max airplanes but shares rose 1.7%.

McDonald’s Corp. (NYS:MCD)  on Wednesday reported fourth-quarter earnings and revenue that beat expectations. Shares rose 1.9%.

Shares of chip maker Advanced Micro Devices Inc. (NAS:AMD)  lost 5.9%. AMD late Tuesday offered an outlook that was weaker than Wall Street analysts had expected, while data-center sales disappointed.

Shares of online auction site eBay Inc . (NAS:EBAY)  fell 4.5%. The company late Tuesday reported fourth-quarter earnings that beat the consensus forecast, but offered weak first-quarter revenue guidance.

Coffee-chain Starbucks Corp. (NAS:SBUX)  late Tuesday topped forecasts with its fiscal first-quarter earnings and called its holiday season “one of the strongest” in its history, but it also warned that China’s coronavirus outbreak was likely to hit its bottom line this year. Shares declined 2.2%

Victoria’s Secret parent L Brands Inc . (NYS:LB)  is exploring strategic alternatives for the lingerie brand, including a full or partial sale, according to a report in The Wall Street Journal. L Brands’ stock rose 12.9%.

Shares of General Electric Co. (NYS:GE) rose 10% after the industrial conglomerate reported fourth-quarter profit and revenue that topped expectations, while its earning outlook was below forecasts.

Shares of AT&T Inc. (NYS:T) (NYS:T) were off 3.9% after the media and telecommunications giant reported better-than-expected fourth-quarter earnings but fell short of forecasts on revenue.

How did other markets trade?

The yield on the 10-year U.S. Treasury note (XTUP:BX:TMUBMUSD10Y)  fell 4 basis points to 1.59%, and has slipped for the past five trading days, to the lowest since October 9 last year.

Oil futures declined Wednesday after the U.S. government data reported domestic crude inventories posted a bigger-than-expected weekly rise. West Texas Intermediate crude for March delivery   on the New York Mercantile Exchange fell 15 cents, or 0.3%, to $53.33 a barrel.

Gold futures finished with a slight gain on Wednesday, then held ground close to that settlement after the U.S. Federal Reserve left its benchmark short-term interest rate unchanged. February gold  was at $1,569.90 an ounce in electronic trading, shortly after the Fed policy statement.

The U.S. dollar edged 0.1% higher against a basket of its rival currencies, according to the ICE U.S. Dollar index (IFUS:DXY) .

European stocks edged up with the Stoxx Europe 600 (STOXX:XX:SXXP)  ending up 0.44% at 419.41.

In Asia overnight, stocks traded mixed, with markets in China closed in an extension of the Lunar New Year holiday enacted as authorities deal with the effects of the coronavirus outbreak. In Hong Kong, the Hang Seng Index (HONG:HK:HSI)  tumbled 2.8%, while Japan’s Nikkei 225 (NIKKEI:JP:NIK)  gained 0.7%.

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