Equities were under pressure in morning Thursday trading, as investors sold on worries about the coronavirus from China. But there is more to the data than meets the eye, as investors quickly picked up on that note. The S&P 500 climbed to new record highs in the stock market today, before settling just below flat.
So what’s beneath the data, which suddenly added almost 15,000 cases and 242 deaths for the new virus? The coronavirus count is now up to a whopping 60,414 cases with 1,370 deaths so far. However, the recent jump in numbers is due to a new diagnosis classification, as doctors reclassify prior cases.
According to Dr. Michael Ryan, the executive director of the World Health Organization’s Health Emergencies Programme, it doesn’t represent “a significant change in the trajectory of the outbreak.”
Tesla
Tesla (NASDAQ:TSLA) shares gapped lower but quickly turned higher, ultimately jumping 4.8%. The move comes after the company announced a $2 billion secondary offering, with an option for an additional $300 million.
It’s no surprise that the stock initially dipped on the news. Increasing the share count does in fact increase supply, which negatively impacts the stock price (at least on paper). However, funding has been a huge concern over the years for Tesla, and with these additional funds raised at a high stock price, investors can have a bit more relief when looking at Tesla’s balance sheet.
Of course, it helps that CEO Elon Musk and Oracle (NYSE:ORCL) co-founder Larry Ellison are buying more shares too.
Movers in the Stock Market Today
FireEye (NASDAQ:FEYE) shares jumped higher on Thursday on rumors that Cisco Systems (NASDAQ:CSCO) — which just reported earnings — is looking to buy the company. According to reports, the company will look to use Goldman Sachs to try to put together a deal. While Cisco has denied the news, FEYE shares remain elevated.
Microsoft (NASDAQ:MSFT) may have been dealt a JEDI setback. That’s after a federal judge temporarily blocked the $10 billion deal with the Pentagon. The move comes after Amazon (NASDAQ:AMZN) requested a motion to pause the contract, as it felt the selection process had “clear deficiencies, errors and unmistakable bias.”
Shares of Sprint (NYSE:S) were initially lower on the day, but closed higher by 0.8% even as tensions mount after the all-clear merger deal with T-Mobile (NASDAQ:TMUS). T-Mobile parent company Deutsche Telekom (OTCMKTS:DTEGY) wants a lower price for the deal, as S stock price has struggled since the original announcement. For its part, Sprint’s controlling shareholder SoftBank (OTCMKTS:SFTBY) does not sport the same sentiment.
Caterpillar (NYSE:CAT) reports that worldwide retail machine sales fell 7% for the rolling three-month period ending in January. That’s worse than the 5% drop reported for December, as each region reported a decline. Interesting, North American sales worsened from down 4% to down 11%, while Asia Pacific improved from down 5% to down just 2%.
Despite this, shares actually climbed slightly on the day.
No smartphone? No problem. Uber (NYSE:UBER) is testing a 1-800 platform that will allow customers to dial up an Uber ride without using the app. There will be no extra charge for the service, according to the company, which is running a pilot program in Arizona.
This will no doubt draw this response from some: “So … a taxi?”
Earnings Roundup
Alibaba (NYSE:BABA) shares slipped 1.8%, despite the company cruising past top- and bottom-line expectations. Sales rose more than 38% year-over-year, while Alibaba reported strength across the board.
So why the selling? Alibaba talked about the impact from the coronavirus, saying it’s doing its best to use its technologies to keep daily necessities in stock for its customers. However, the extended Lunar New Year has caused problems with fulfillments, while food deliveries will fall year-over-year.
Cisco Systems performed worse, falling 5.2% in the stock market today. The company beat on earnings and revenue expectations, even though the latter declined 3.5% year-over-year. The company’s guidance for next quarter was mostly in line with expectations, but it clearly failed to inspire investors.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN.