U.S. stocks ended mixed Thursday, recovering from early losses, as investors digested earnings reports and took heart from a World Health Organization decision to refrain from declaring China’s coronavirus outbreak a global emergency.
Investors watched travel and consumer good stocks in particular for any impact from China’s struggles to contain the viral outbreak that has killed 17 people and infected about 650 in several countries.
What are the major indexes doing?
The Dow Jones Industrial Average DJIA, -0.09% ended down 26.18 points, or 0.1%, at 29,160.09 but the S&P 500 index SPX, +0.11% closed up 3.79 points or 0.1% at 3,325.50, and the Nasdaq Composite Index COMP, +0.20% recovered to gain 18.71 points or 0.2%, to end at 9,402.48 for a record close.
What’s driving the market?
Reports on U.S. quarterly earnings poured in Thursday with investors eager to glean more news about the health of the domestic economy in the midst of a historic run-up in the stock market.
Meanwhile, Wall Street was keeping one eye on the coronavirus outbreak that has rocked Chinese markets and threatens to hurt an already-sluggish economy, along with the potential to harm global economic growth.
Worries about the coronavirus accelerated after Beijing quarantined two cities with a combined population of about 17 million in an effort to contain the spread of the disease which is being compared with a deadly outbreak of the severe acute respiratory syndrome epidemic in 2003 that killed about 800 people.
However, U.S. stocks recovered from early losses after the World Health Organization said it wouldn’t declare the coronavirus outbreak in China to be a global health emergency yet.
See: Here’s how the stock market has performed during past viral outbreaks, as China locks down 3 cities
Losses for shares of Dow components Procter & Gamble Co. PG, -0.46% and Travelers Cos. Inc. TRV, -5.06% after reporting earnings weighed on the blue-chip gauge.
“The sustainable valuations of equities in general are probably higher now than 20 years ago, given a decline in the normal level of interest rates,” wrote John Higgins, chief markets economist at Capital Economics, in a Thursday note. But “we anticipate that the outperformance of megacap equities will end soon,” he said. “This is partly because we forecast an uneven global economic recovery in 2020, in which the U.S. fares quite well while China and Europe struggle. This ought to benefit smaller U.S. firms more than the biggest U.S. multinationals.”
On the economic front, the number of Americans who applied for first-time unemployment benefits in mid-January rose slightly, but layoffs remain near a 50-year low and there’s no sign of deterioration in the strongest U.S. labor market in decades. Initial jobless claims increased by 6,000 to 211,000 in the seven days ended Jan. 18, the government said Thursday.
Meanwhile, the European Central Bank concluded a monetary policy meeting on Thursday by holding interest rates steady.
Which stocks are in focus?
Shares of P&G closed down 0.5% Thursday, after the consumer-products companyreported a fiscal second-quarter profit that beat expectations but revenue that rose less than forecast.
Traveler’s stock, meanwhile, slumped 5.06%, after the insurer reported profit and revenue that topped expectations but net premiums written that came up a bit shy.
Shares of Comcast Corp. CMCSA, -3.77% fell 3.8% even after the media giant topped revenue and earnings estimates for the fourth quarter, but Netflix NFLX, +7.24% stock rose 7.2% after Comcast posted big video-subscriber losses.
American Airlines Group Inc. AAL, +5.42% reported fourth-quarter profit and load factor that rose better than Wall Street had expected, while revenue met forecasts and the stock rose 5.4% despite concerns over the impact of the coronavirus on travel demand.
JetBlue Airways Corp.’s JBLU, +6.44% stock rose 6.4% Thursday, after the airline topped earnings estimates for the fourth quarter.
Shares of Southwest Airlines Co. LUV, +3.59% rose 3.6% after the air carrier reported a fourth-quarter profit and load factor that missed expectations, while revenue rose a little above forecasts. Chief Executive Gary Kelly said operational performance in 2019 was reduced by an estimated $828 million due to the grounding of Boeing Co.’s BA, +2.84% 737 MAX planes.
See also: At Boeing, growing debt and 737 Max doubts cloud quarterly earnings
Which stocks are in focus?
Government bond yields slipped Thursday, with the yield on the 10-year U.S. Treasury TMUBMUSD10Y, +0.80% down 4 basis points, to 1.74%, the lowest level since Dec. 3.
Oil prices were in retreat, with the price of a barrel of West Texas Intermediate crude for March delivery CLH20, +0.43% fell 2%, to $55.59. In precious metals, gold for February delivery GCG20, -0.33% settled up 0.3% at $1561.70 an ounce.
The U.S. dollar rose 0.1% relative to a basket of six rivals, according to the ICE US Dollar index DXY, +0.04%
In Europe, stocks SXXP, -0.71% fell 0.7% amid coronavirus concerns and after the European Central Bank left key monetary policy unchanged, as expected.
In Asia overnight, stocks sold off sharply, with the China CSI 300 000300, -3.10% losing 3.1%, Hong Kong’s Hang Seng Index HSI, +0.15% down 1.5% and Japan’s Nikkei 225 NIK, +0.15% losing 1%.