Secure those eyes on the back of your head for Wednesday.
After record-breaking Apple results, investors will look to Facebook, Tesla and a trove of other companies to bring in some upbeat earnings. We’ll also get the outcome of the Federal Reserve meeting, where markets are looking for steady policy and could use some calm demeanor from Chairman Jerome Powell.
That is as the coronavirus death toll tops 130 and confirmed China cases near 6,000, notably overtaking the SARS outbreak of 2003. It may prove a big test for the old and new investor.
Our call of the day comes from Eric Schoenstein, portfolio manager for the Jensen Quality Growth Fund JENSX, +0.38% at Jensen Investment Management, who joined the firm in 2002 and has clearly seen the fund through a number of market crises over the years.
Average annual total returns for the fund over 10 years are just over 13%, keeping pace with the S&P 500. He said the buy-and-hold fund has consistently sought companies with strong business models and a competitive advantage to keep free cash flow coming and ride out market-moving events. Think consumer staples, IT and health care, Schoenstein tells MarketWatch.
Some of the top five companies in that fund have been in it more than a decade—conglomerate United Technologies UTX, +1.21%, Microsoft MSFT, +1.96%, PepsiCo PEP, +0.21%, medical technology group Beckton Dickinson BTX, -3.85% and Johnson & Johnson JNJ, +0.50%.
“When we first owned Microsoft it was dead money,” the manager said, noting that regulatory concerns were hanging over the software maker, but that it went on to become a jewel in the portfolio.
Schoenstein is braced for a tougher 2020, though. “We remain somewhat concerned about what’s happening in 2020,” he said, adding that for gains to continue, markets will need to see more support coming from “actual earnings and business performance.”
The fund also holds Google parent Alphabet GOOGL, +1.31% and Apple. Fellow fund manager Kevin Walkush said they started investing in 2016 in Apple, and while they remain happy on the iPhone maker’s prospects and fundamentals, valuation gives them pause so they’d be “cautious about initiating a position at this time.”
Dow YM00, +0.33%, S&P ES00, +0.35% and Nasdaq NQ00, +0.47% futures are modestly higher, alongside European stocks SXXP, +0.48%. In Asia, Hong Kong’s Hang Seng HSI, -2.82% reopened with losses, while South Korea’s Kospi 180721, +0.39% posted gains.
Our chart from Goldman Sachs shows which assets have been hardest hit by coronavirus concerns in recent days:
Performance between Jan. 17 and Jan. 27, 2020
They also note that investors may want to brace for four weeks of rough trade, based on prior epidemics:
Conglomerate GE GE, +2.53%, telecommunications company AT&T T, +0.86%, jet maker Boeing BA, -0.01%, fast food restaurant McDonald’s MCD, +0.50% and food processing giant Archer Daniel are reporting. After the close, technology companies Microsoft MSFT, +1.96% and Facebook FB, +1.36%, electric-car maker Tesla TSLA, +1.59% and online payments group PayPal PYPL, +1.11% are due.
The U.S. is reportedly considering a ban on all flights from China to stem the fast-spreading coronavirus and British Airways is the latest airline to curb routes to that country. United Arab Emirates is the most recent country to report infections.
Advance trade in goods and pending home sales are due ahead of that Federal Reserve decision
Beijing drugstore fined $434,530 for a sixfold hike in mask prices.
Gear from the late National Basketball Association star Kobe Bryant will cost you thousands of dollars.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.