It was an interesting session in the stock market today. U.S. equities were moving higher in morning trade, as investors looked for another new all-time high in the S&P 500.
Within less than a one-hour span though, equities fell off the table. Indices dropped by more than 1% in mid-day trading, with the drop thrusting a number of stocks lower on the day. Bonds and gold — two assets we flagged the other day — continue to advance.
Impressively, the iShares Russell 2000 ETF (NYSEARCA:IWM) held up well, closing higher by 0.24%. The small-caps exchange-traded fund has found buyers, which may bode well for investors who view the IWM as a risk-on, risk-off signal. However, it’s worth nothing that while the other major U.S. indices have hit new high after new high, the IWM has still not eclipsed its high from 2018.
Coronavirus Update
The impacts are starting to add up from the coronavirus from China, and it should come as little surprise to Wall Street. Activity in China ground to a halt earlier this month on fears of the spreading virus, which has now seen the death toll top 2,000.
Speaking at the Consumer Analyst Group of New York (CAGNY) conference, Procter & Gamble (NYSE:PG) said that, “Results for the January to March quarter in China and for the total Company will be materially impacted on both the top and bottom line by these dynamics,” CFO and COO Jon Moeller said. However, the company believe that full-year results should remain within the prior set ranges.
Yum! Brands (NYSE:YUM) also came out saying that it expects its first-quarter results to see a “significant impact.”
Of course they will. So will others. Apple (NASDAQ:AAPL) made a similar announcement earlier this week. There will be an economic impact. The question is whether the market will care.
Movers in the Stock Market Today
L Brands (NYSE:LB) confirmed a deal with Sycamore Partners that will allow its Victoria’s Secret brand to go private at a value of $1.1 billion. The deal will result in L Brands retaining a 45% stake in the company, with the remaining 55% going to Sycamore. L Brands will pay down debt and turn its focus to Bath & Body Works.
Morgan Stanley (NYSE:MS) shares sank more than 4.5% after announcing it will buy E*Trade (NASDAQ:ETFC). The $13 billion all-stock deal values E*Trade at $55.74 per share as of the most recent close.
Wall Street was looking for a move on E*Trade, with many rumors speculating that it would be Goldman Sachs (NYSE:GS) who scooped up the company. With the move — the largest acquisition by a Wall Street bank since the financial crisis — Morgan Stanley will get E*Trade’s 5 million retail accounts, $360 billion in assets and an online bank.
Six Flags Entertainment (NYSE:SIX) shares are tanking Thursday, down more than 16%. The company warned that organic sales were softer than expected. Attendance for the quarter slipped 3% year-over-year, while management is now targeting a full-year EBITDA range of $435 million to $465 million. That’s below analysts’ expectations of $533 million.
Industry-wide investors aren’t sweating Six Flags’ news too much, with Cedar Fair (NYSE:FUN), Disney (NYSE:DIS) and SeaWorld Entertainment (NYSE:SEAS) barely budging on the news.
Struggling through an equally difficult day is ViacomCBS (NASDAQ:VIAC). Shares are down over 17% after the company missed on earnings and revenue expectations in the company’s first post-merger report. Guidance didn’t help matters as costs continue to wear on. Despite a low valuation, this stock has no momentum working in the bulls’ favor.
On the other side of broadcast, Comcast’s (NASDAQ:CMCSA) NBC unit was behind the most-ever watched Democratic debate. The debate drew almost 20 million viewers on NBC and MSNBC and more than 13 million live-streaming views.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, DIS and VIAC.