CIG News – Earnings Bonanza: Results Keep Pouring In, With Investors Looking Over Merck, Disney. News provided by Benzinga Tech, The tech sector is the category of the markets relating to the research & development and/or distribution of technological based services as well as goods.
It started as a buy-the-dip rally, but it seems to have morphed into a buy-into-strength rally, with major indices eyeing fresh all-time highs. Whatever you call it, it’s been a wild week, and we’re not even at halftime.
The latest surge came in pre-market trading Wednesday after Asian stocks climbed more than 1% on a report out of China of a possible coronavirus treatment. So far, it seems like it’s been enough to turn U.S. stocks around from earlier losses and is helping the market significantly. That said, some companies—including Nike Inc (NYSE: NKE) and Walt Disney Co (NYSE: DIS)—are starting to talk about the virus and its possible impact on their sales in China, reinforcing the risk that’s still out there.
Many investors appear to be throwing some (but not all) of those risk worries out with the bathwater the last two days despite predictions that the coronavirus might take a real toll on China’s long-term economic growth prospects (see more below). Tuesday’s sharp rally brought the S&P 500 Index (INDEXSP: .INX) back toward levels it last saw before the virus in mid-January, and some analysts were telling the media about great buying opportunities at lower levels of the market after last week’s selloff.
That might be a little hasty, as a talking tree in a movie once said. At worst, the sell-off last week took the SPX down to about 3% off its all-time highs. Some market watchers had speculated about a 5% to 6% drop before buying interest would recharge, but now those predictions look way off.
Whatever the case, it’s a big earnings morning, with General Motors Company (NYSE: GM) up 1% after the company easily beat Wall Street analysts’ estimates. This might be a call worth listening to for the company’s discussion about the situation in China, where it has a huge business.
The news from Merck & Co, Inc. (NYSE: MRK) was mixed. Shares are down nearly 2% after the company came up just short of Wall Street projections on the revenue side despite beating on earnings. It did project above-consensus earnings for the full year, with revenue about where analysts had expected.
MRK is doing a little restructure, planning to spin off its women's health, legacy brands and biosimilar products into a new company. That might be interesting to watch, especially the biosimilars part. Those drugs were developed as cheaper versions of costly biologic products used to treat auto-immune and other diseases and are part of a growing challenge for established biotech firms.
Late Tuesday served up disappointing results from Ford Motor Company (NYSE: F), which missed analysts’ bottom-line projections and gave guidance that came up short. Shares were getting run over, down more than 8% in pre-market trading. DIS, however, saw shares bounce slightly ahead of the open after beating Wall Street consensus on both earnings and revenue and reporting strong Disney+ streaming paid subscriber numbers of nearly 29 million since the service launched last fall.
On the data side, weekly crude oil inventories later this morning might also get a glance from investors as crude futures gyrate near $50 a barrel level and fell below it at times Tuesday to nearly 13-month lows. Crude demand out of China could slide 20% due to coronavirus, Bloomberg reported, meaning a three-million …
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