It was another banner day for U.S. equities as ebbing concerns about the new coronavirus from China served as a springboard for the major domestic benchmarks to hit all-time highs.
- The S&P 500 vaulted higher by 0.65%.
- The Dow Jones Industrial Average surged 0.94%.
- The Nasdaq Composite soared 0.90%.
- UnitedHealth Group (NYSE:UNH) appeared at peace with the results of last night’s New Hampshire Democratic Primary as the stock gained 4.36%, making it the Dow’s leader today.
The coronavirus situation remains fluid to say the least, but Wednesday’s market action suggests investors are wagering that the virus will not worsen and that China will bring some resolution to the situation sooner than later.
“The pace of new reported cases appears to be slowing down as they hit their lowest levels since late January. Chinese lawmakers have also taken steps to curb a possible economic downturn from the coronavirus,” reports CNBC.
In late trading, 20 of the 30 Dow Jones stocks were higher today with about dozen sporting gains of 1% or more.
A Bernie Bump?
With his victory in New Hampshire last night, Sen. Bernie Sanders is — at least for the moment — the Democratic front runner. He is a supporter of Medicare For All and that may confuse some investors about why UnitedHealth has recently been steady and soared today.
The reason UNH, one of the names most vulnerable to Medicare For All talk, and the market in general may be rising along with Sanders’s momentum requires further examination. Strategists for Standard Charter point out in a recent note that if Sanders is the Democratic nominee this year, that increases the odds of President Trump winning a second term, reports Barron’s.
Sanders is far from a sure bet at this point simply because Michael Bloomberg, the candidate with the deepest pockets, didn’t actively campaign in Iowa and New Hampshire. Rather, the former New York mayor is targeting a big delegate haul from the upcoming Super Tuesday primary slate. Let’s see how markets react to those outcomes when they arrive early next month.
Bad News Becomes Good News
Nike (NYSE:NKE) was in position to be the second-best Dow stock today due to a combination of ebbing coronavirus concerns and a weak earnings report yesterday from rival Under Armour (NYSE:UA).
Those are helpful, but fleeting catalysts. Arguably, a better reason for investors to consider Nike is the company’s new retail strategy, one that should have longer-ranging, positive implications.
Also in the Club
Along with UnitedHealth and Nike, Caterpillar (NYSE:CAT) was the other Dow component in the 2% or more club today. This is an obvious China-sensitive name and one that has struggled to start 2020 due in large part to the coronavirus issue.
The industrial machinery maker was able to reopen its China-based factories a couple of days ago, but the headwind going forward for Caterpillar will be just how much the “Wuhan virus” is going to shave off global economic, particularly in China.
Good News Part II
Sometimes, the mere thought of good news helps a stock and that was the case with Boeing (NYSE:BA) today after Credit Suisse analyst Robert Spingarn raised his price target on the stock to $367 from $321, but he kept his “hold” rating in place. He believes Boeing is entering a “positive news period.”
“While nothing material was revealed, the perspectives offered by the company…left us incrementally more constructive on the name,” said Spingarn in a note to clients.
Bottom Line on the Dow Jones Today
There are a few more earnings report of note to consider, including Dow component Cisco Systems (NASDAQ:CSCO) later today and PepsiCo (NASDAQ:PEP) and Nvidia (NASDAQ:NVDA) on Thursday.
Clearly, the near-term issues investors need to stay abreast of are the coronavirus because a cure hasn’t been found and incremental progress could be set back at a moment’s notice. In the U.S., there will be some respite on the political front as the Nevada Caucus is over a week away.
As of this writing, Todd Shriber did not own any of the aforementioned securities.