Can Investors Begin To Focus On Issues Beyond The Coronavirus?

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Posted: Feb 05, 2020 9:16 AM
Can Investors Begin To Focus On Issues Beyond The Coronavirus?

Source: AP Photo/Richard Drew

There was some selling into the close on Tuesday. The market enjoyed a boffo session, signaling the notion investors could begin to focus on other issues beyond the coronavirus. Of course, the coronavirus remains a threat until the spread of the virus slows and more patients go home. Nonetheless, the market can see a day when the economy and earnings are of paramount importance.

The Dow Jones Industrial Average (DJIA) is back above its 50-day moving average after slipping 3.7%, which is hardly a textbook retracement or pullback, but it could be for the moment.

The pent-up buying created an overwhelmingly strong market breadth:

NYSE

  • 2,124 advancers
  • 826 decliners
  • 2.59 billion up volume
  • 699 million down volume

NASDAQ

  • 2,254 advancers
  • 970 decliners
  • 1.61 billion up volume
  • 501 million down volume

The earnings picture continues to improve as well.

249 companies reported:

Revenue

  • 64.1% beat
  • 35.9% miss
  • +4.7% blended growth

Earnings

  • 69.5% beat
  • 19.3% miss
  • +1.6% blended growth

Earnings After Close

Disney (DIS) posted another impressive number, although the stock was unchanged after the release:

  • Media: $7.36 billion +24%
  • Cable: $4.77 billion +20%
  • Broadcast: $2.60 billion +34%
  • Parks: $7.40 billion +8%
  • Studio: $3.76 billion +100%
  • Direct-to-Consumer: $3.99 billion +100%

There were 26.5 million Disney + subscribers against the consensus of 20.8 million.

Ford Motor (F) blew it again, as restructuring costs and the loss of market shares continue to bedevil the company. The company lost $200 million in China in the quarter, bringing the total of losses in 2019 to $771 million, down from $1.5 billion in 2018 - but still huge, as shares declined to 2.0% from 2.3%.

Chipotle (CMG) crushed it, beating on top and bottom, as comp-store sales came in at 13.4% against an estimate of 9.8%.

S&P 500 Index

+1.50%

 

Communication Services (XLC)

+1.04%

 

Consumer Discretionary (XLY)

+1.82%

 

Consumer Staples (XLP)

+0.60%

 

Energy (XLE)

+0.36%

 

Financials (XLF)

+0.96%

 

Health Care (XLV)

+1.76%

 

Industrials (XLI)

+1.89%

 

Materials (XLB)

+1.77%

 

Real Estate (XLRE)

+1.30%

 

Technology (XLK)

+2.62%

 

Utilities (XLU)

 

-1.00%

The Message of the Market

Yesterday, it was all about Technology (XLK), especially the Apple (AAPL) orbit and computer chip names. The iShares PHLX Semiconductor ETF (SOXX) is coming on again, resuming the rally that began four years ago. You must have exposure to semiconductors. 

Portfolio Approach                   

We’ve taken a lot of action in the model portfolio, so make sure you’re updated on alerts or check with your rep.