U.S. stocks advanced and the S&P 500 and Nasdaq hit record highs Wednesday after a mixed session a day prior. The number of cases and death toll from the coronavirus continued to rise, albeit at an apparently decelerating pace.
4:04 p.m. ET: S&P 500, Nasdaq close at record highs
Here’s where the major indices had settled as of 4:04 p.m. ET:
S&P 500 (^GSPC): +0.47% or +15.82 points to 3,386.11
Dow (^DJI): +0.40% or +115.63 points to 29,347.82
Nasdaq (^IXIC): +0.87% or +84.44 points to 9,817.18
Crude oil (CL=F): +2.40% or +1.25 to 53.30 a barrel
Gold (GC=F): +0.69% or +11.10 to 1,614.70 per ounce
3:00 p.m. ET: Investors are feasting on corporate debt
The federal government is hardly the only game in town on a borrowing binge. Investment grade debt is perched at record highs — and soaring demand (plus low interest rates/Fed liquidity) has pushed borrowing costs to new depths.
A chart from Deutsche Bank’s Torsten Slok tells the story:
As of Q3 of last year, total corporate debt outstanding topped $10 trillion, according to Fed flow of funds data. What makes the data more interesting is that foreign governments have largely soured on U.S. denominated debt — but the slack is being picked up by domestic institutions.
2:00 p.m. ET: Fed minutes show members viewed policy as “likely to remain appropriate for a time”
Federal Reserve officials viewed the current level of monetary policy as “likely to remain appropriate for a time,” reaffirming Federal Open Market Committee members’ wait-and-see stance for policy at present, according to minutes from the Fed’s January meeting released Wednesday.
According to the minutes, the Fed addressed points including the U.S. economy’s persistently below-target inflationary signals. Several participants suggested that inflation “modestly exceeding 2% for a period would be consistent with the achievement” of the Fed’s longer-run inflation objective, with such an overshoot helping the Fed hit that target symmetrically.
On the U.S. labor market, the Fed underscored that many of its participants felt the economy still had slack to bring more individuals into the workforce, even with the unemployment rate hovering near a 50-year low.
“Many participants pointed to the strong performance of labor force participation despite the downward pressures associated with an aging population, and several raised the possibility that there was some room for labor force participation to rise further,” the Fed minutes detailed.
1:04 p.m. ET: Stocks jump, S&P 500 and Nasdaq hold near record highs
The S&P 500 and Nasdaq each hit record intraday highs during Wednesday’s session, and held near these levels into the last three hours of trading.
Here were the main moves in markets, as of 1:04 p.m. ET:
S&P 500 (^GSPC): +0.61% or +20.63 points to 3,390.92
Dow (^DJI): +0.57% or +165.9 points to 29,398.09
Nasdaq (^IXIC): +0.97% or +93.93 points to 9,826.63
Crude oil (CL=F): +2.65% or +$1.38 to $53.43 a barrel
Gold (GC=F): +0.47% or +$7.50 to $1,611.10 per ounce
10:26 a.m. ET: Royal Caribbean Cruises downgraded to Hold by Argus amid coronavirus
Argus downgraded shares of Royal Caribbean Cruises to Hold from Buy, citing negative impacts to bookings as the coronavirus outbreak spreads. The firm also lowered its 2020 earnings per share estimate to $10.10 from $10.80, and its 2021 EPS estimate to $11.25 from $11.70.
This came after Royal Caribbean last week canceled 10 additional cruises in Southeast Asia as a result of the virus, adding to eight previous cancellations. The company said this would result in a 65-cent reduction to 2020 EPS, and that cancelling its remaining Asian cruises in 2020 could cut EPS by another 55 cents.
“We note that the current cancellations, occurring in the first-quarter ‘wave period’ (bookings prior to the spring and summer), are likely to negatively impact net yields over the next 3-4 quarters,” Argus analysts wrote in the note.
Shares of Royal Caribbean are down about 17% for the year to date.
10:20 a.m. ET: Disney+ to get India boost, Wells Fargo says
Via Bloomberg, Wells Fargo says Disney+’s foray into India will prove lucrative, with the entertainment giant’s nascent streaming platform set to add 6 million subscribers in the region by the end of 2020.
Walt Disney plans to deploy its local over-the-top Hotstar platform to drive user growth. According to analyst Steven Cahall:
“the question for DIS becomes how aggressive it’s willing to be in putting key Hotstar content behind the Disney+ paywall, or otherwise putting exclusive local and live Indian content in a bundle that aggregates it with Disney+”
The firm maintains a price target of $180. Disney’s stock added nearly 1% from Tuesday’s close, trading above $140.
9:30 a.m. ET: Wall Street pops at the open
Blue chip and technology stocks rose for the first day in nearly a week, as investors looked to recoup losses stemming from China’s ongoing coronavirus crisis. Markets were roiled by Apple’s announcement that quarterly earnings would suffer in the wake of the outbreak, which some fear could undermine growth as the world’s second-largest economy remains isolated.
Here’s where the major indices were as of 9:30 a.m. ET:
S&P 500 (^GSPC): +0.39% or 13.23 points
Dow (^DJI): +0.27% or 77.99 points
Nasdaq (^IXIC): +0.70% or 68.35 points
8:30 a.m. ET: Building permits rise to highest level since 2007 in January
Housing starts pulled back less than anticipated from December’s 13-year high in January and building permits jumped to the highest level in more than a decade, in the latest affirmation of a firming U.S. housing market.
Housing starts fell 3.6% to a seasonally adjusted 1.567 million in January, the Census Bureau said Wednesday. That was better than the decline of 11.2% to 1.428 million expected, according to Bloomberg consensus data. In December, housing starts had surged 17.7% to 1.626 million, marking a 13-year high.
Building permits, which serve as a gauge of future home-building, jumped far more than expected in January. Building permits rose 9.2% to 1.551 million in January, the highest level since March 2007. This more than reversed December’s 3.7% decline to 1.42 million.
7:37 a.m. ET: Stock futures drift higher in early trading
U.S. stock futures were higher Wednesday morning. The S&P 500 and Dow looked to recover some of Tuesday’s losses spurred after Apple abandoned its March quarter sales guidance due to supply chain and demand impacts due to the coronavirus.
As of Wednesday, the death toll from the coronavirus exceeded 2,000, and the number of reported cases was more than 75,000 globally, according to data from the European Center for Disease Prevention and Control.
Companies including athletic-wear makers Adidas and Puma were some of the latest corporations to call out the impact of the coronavirus to their businesses.
Amid the disruptions, China has been using stimulus measures to help soften the blow of the coronavirus on its domestic industries. Based on a Bloomberg report, the country is considering tactics including direct cash infusions and mergers to help boost its domestic airline industry, as flight cancellations and reduced travel roil the industry. Such a move would add to stimulus China’s central bank unleashed on Monday, with the People’s Bank of China having cut its medium-term lending facility to boost borrowing and lending in the outbreak-stricken economy.
Here were the main moves during the pre-market session, as of 7:37 a.m. ET:
S&P 500 futures (ES=F): 3,378.00, up 8.75 points or 0.26%
Dow futures (YM=F): 29,286.00, up 75 points or 0.26%
Nasdaq futures (NQ=F): 9,671.75, up 35.75 points or 0.37%
Crude oil (CL=F): $52.75 per barrel, up $0.70 or 1.34%
Gold (GC=F): $1,611.40 per ounce, up $7.80 or 0.49%