U.S. stocks punched higher Wednesday morning, pointing to a third consecutive day of gains, as Wall Street attempted to fully erase a selloff sparked in part by an Asian influenza that has killed hundreds and infected tens of thousands.
How are stock benchmarks faring?
The Dow Jones Industrial Average DJIA, +0.71% rose 275 points, or 1%, to trade at 29,083, while the S&P 500 SPX, +0.54% was up 26 points, or 0.8%, at 3,324. The Nasdaq Composite Index COMP, +0.04% added about 40 points, 0.4%, to trade near 9,508, after carving out an intraday record at 9,574.94.
What’s driving the market?
The market’s bullish complexion on Wednesday was being partly attributed to unverified reports of treatments that could be effective against the Wuhan virus that has stricken China and spread to other parts of the globe. Sky News reported on Wednesday that U.K. researchers had made progress in lab tests toward a vaccine for the virus that has been likened to SARS, or severe acute respiratory syndrome. Separately, a research team at Zhejiang University claimed to identify a cocktail of drugs, namely Abidol and Darunavir, that has thus far proven effective at stanching the virus in infected patients. A separate report from China’s media pointed to a combination of Lopinavir and Ritonavir as an effective treatment.
However, the World Health Organization has said that there are “no known effective therapeutics” against the virus, in response to the media reports.
The number of confirmed cases of the coronavirus rose above 24,000, as of Tuesday, and Hong Kong reported its first death from the virus, which has claimed more than 490 lives.
Although the outbreak will likely dent China’s growth, overall anxieties have eased, helping Wall Street investors focus on corporate quarterly results, which have thus far been upbeat. A batch of earnings are still rolling out this week.
With a little less than half of the S&P 500 companies having reported, the blended earnings growth rate shows a 0.14% rise, compared against a 2.0% decline expected at the start of earnings season, according to FactSet.
Moves in the market also come after President Donald Trump on Tuesday delivered his third State of the Union address, which painted an optimistic picture of the country’s future and touted the strength of the economy during his tenure.
A report on private-sector employment from Automatic Data Processing Inc. blew past economists’ consensus estimates, showing that 291,000 jobs were added in January, nearly double the consensus estimate of 154,000.
ADP’s data were “robust and they confirmed Trump’s narrative of ‘blazing economy,’” said Naeem Aslam, chief market analyst for AvaTrade. “It confirmed that the economy isn’t suffering. In [other] words, the risk-on trade is going to stay a little longer in this market. Having said that, traders are going to continue to scrutinize the upcoming data until the (more closely followed reading of jobs on Friday from the Labor Department.)”
Separately, the services sector of the U.S. economy, which accounts for most activity, grew at the fastest pace in six months in January, according to ISM’s purchasing manager survey.
Earlier, a government report showed that the U.S. trade deficit fell in 2019 for the first time in six years, reflecting tariff-reduced imports from China, with a 1.7% decline to $616.8 billion in December.
Which stocks are in focus?
- Shares of Merck & Co. Inc. MRK, -3.80% were down 3.4% as the company said it was spinning off its Women’s Health, Trusted Legacy Brands and Biosimilar Products businesses as it reported results.
- Capri Holdings Ltd. shares CPRI, +7.96% jumped more than 8% Wednesday morning after the luxury fashion house reported fiscal third-quarter earnings and revenue that beat expectations.
- Humana Inc.’s HUM, +4.51% stock rose nearly 5% after the company reported fourth-quarter profit and revenue that beat expectations, sending its shares higher.
- Streaming-music service Spotify Technology SPOT, -4.10% said it swung to a €209 million ($230 million) loss, or €1.14 a share, while revenue rose. Shared were down nearly 4.4% in morning trade.
- EBay Inc.’s shares EBAY, -1.88% fell 1.8% as The Wall Street Journal on Tuesday reported that New York Stock Exchange-parent Intercontinental Exchange Inc. ICE, -0.63% approached the e-commerce company multiple times regarding a takeover.
- Macy’s Inc. shares rose 2.3% as the department-store operator said it plans to close 125 stores over the next three years.
- Gilead Sciences Inc. GILD, -3.89% stock lost 3.8% after the drugmaker cut its outlook after reporting results late Tuesday.
- Coty Inc. shares COTY, +13.92% jumped 17% after upbeat guidance.
- Tesla Inc. shares TSLA, -15.34% slid more than 13% after an analyst downgrade.
How are other markets trading?
Government bond yields continued to climb, with the 10-year U.S. Treasury note TMUBMUSD10Y, +2.15% up about 5 basis points to 1.65%, a day after its biggest one-day gain since Dec. 12, according to Dow Jones Market Data.
Oil prices jumped, a day after adding to losses that put the contract at its lowest settlement in more than a year. The price of a barrel of West Texas Intermediate crude for March delivery CLH20, +3.95% rose 3.8% to $51.49. In precious metals, the price of an ounce of gold for April delivery GCJ20, +0.35% picked up $2.00, or 0.1%, to touch $1,557.50, following its lowest close since Jan. 22.
The U.S. dollar DXY, +0.28% rose 0.3% to 98.28 relative to a basket of six major peers.
In Europe, the Stoxx Europe 600 SXXP, +1.14% was headed 1.2% higher.