On Monday, the SPDR S&P 500 ETF (NYSEARCA:SPY) rallied 1.5%. However, despite those gains, it closed well off the highs. It left a lot of investors wondering what type of action was heading our way in the stock market today.
Not many were pricing in a 1.5% surge on Tuesday, as the S&P 500 ground higher throughout the day. Equities plowed higher, as the Nasdaq Composite went on to hit a new all-time high.
Casino stocks like Wynn Resorts (NASDAQ:WYNN), Las Vegas Sands (NYSE:LVS) and MGM Resorts (NYSE:MGM) all climbed despite China closing down Macau casinos for 15 days. The death and infection count from the coronavirus continues to climb. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) disappointed on earnings and fell 2.5%.
Yet, it doesn’t seem to matter. I’m not writing this to say the market shouldn’t be rallying. I’m highlighting the fact that despite all of this — and more — the market is rallying, as U.S. equities remain incredibly resilient.
Let’s look at some movers in the stock market today.
Stock Market Today
Tesla (NASDAQ:TSLA) once again commanded investors’ attention. Anyone who thought the stock simply couldn’t rally anymore following Monday’s 19.9% rally on several catalysts were quickly proved wrong on Tuesday. Shares surged another 24.2%, hitting a new 52-week high of $968.99. However, a late-session drop saw Tesla stock lose more than $80 per share, closing higher by “just” 13.7%.
CEO Elon Musk is watching his stake balloon higher, as are many long-time bulls. There’s no telling how high TSLA will go now and how low it will go once this run is over. But it’s still one for the ages. Oh yeah, and Citron is officially back on the short side, arguing that “we believe even Elon would short the stock here if he was a fund manager.”
BP (NYSE:BP) shares rose 3.6% on Tuesday, after the company beat on earnings and revenue expectations. Further, BP raised its dividend by 2.4%, giving it a forward yield of more than 7%. It was a nod of confidence from management, something investors have been desperately craving after watching Exxon Mobil (NYSE:XOM) sink to its lowest price since 2010, and as other energy stalwarts falter as well.
eBay (NASDAQ:EBAY) shares erupted Tuesday, climbing 8.8% on reports that Intercontinental Exchange (NYSE:ICE) is weighing a bid for the online auction site. The company has reportedly approached eBay about a takeover, which would value eBay at more than $30 billion.
Rewind
At the top we mentioned a few key stories, the first of which is Google. Shares slipped 2.5% on the day after the company reported fourth-quarter earnings. While its reported profit of $15.35 per share blew past estimates by $2.81 per share, revenue missed expectations.
Sales of $46.1 billion grew 17.3% year-over-year, but missed consensus expectations by almost $800 million. Worse operating profit missed estimates too. While the company broke out YouTube and cloud results — which were admittedly impressive — the stock couldn’t muster a rally despite the overall market strength.
In Macau, things aren’t looking so hot. In an effort to stymie the spread of the coronavirus, authorities shut down casinos in the region for 15 days. Despite that news, Wynn, LVS and MGM all rallied on the day.
Both moves are significant. For Macau, the world’s largest gambling hub, shutting down shows just how serious China is about containing the coronavirus. It also shows what type of impact companies can expect this quarter as a result. With business grinding to a halt in many Chinese cities, it will certainly be felt at some point.
As for Wynn & Co., the casino stocks have been hit quite hard, shedding over 20% in some cases from the January highs. This is simply a sign of “buy the rumor, sell the news.” Now the question is whether these stocks can maintain above the recent low.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.