Select Page

The Standard & Poor’s 500 finished the day down a scant 0.09%. The Dow Jones Industrial Average was up 0.04%. The NASDAQ Composite was ahead 006$% and the Russell 2000 small cap index dropped 0.55%. The iShares MSCI Emerging Markets ETF ended the day higher by 0.48%. The Hong Kong market reopened for trading today and the Hang Seng index was lower by 2.4%.

News from China showed that the coronavirus continues to spread with more patients now reported to have been infected than in the 2002-2003 SARS pandemic. Fortunately, the virus isn’t as fatal as SARS so the death toll remains well below the 800 in that earlier virus outbreak.

Balancing the bad news was the report of earnings from Apple (AAPL) yesterday that beat expectations and solid forward guidance. Apple was up 2.09% today. After the close today Microsoft (MSFT) also reported an earnings beat. The stock, which had been up 1.56% in the regular session, added 2.88%in after-hours trading. In addition Tesla (TSLA) reported stronger than expected vehicles sales for its fourth quarter.The stock was up 2.49% in the regular session before the news and then roared ahead 11.74% in after-hours trading.

Tomorrow’s market may not have the same earnings good news to offset coronavirus fears. Yes, there will be post-earnings beat trading in Microsoft and Tesla, which will be positive support for stock prices, but Facebook (FB) delivered disappointing guidance in its earnings report today. The stock, which had been up 2.50% in the regular season before the earnings report, fell 5.77% in after-hours (and after report) trading.

The Facebook pattern–solid fourth quarter 2019 earnings but disappointing guidance for the current quarter of 2020 and further into the year–is exactly what Wall Street analysts feared before the start of earnings season reporting. And as such Facebook’s miss could have a wider impact than on just the stock and its technology peers.

Re-enforcing that message PayPal (PYPL) outlined the same pattern in its earnings report today with disappointing guidance knocked the stock down 2.88% in the after-hours season after a small 0.12% gain in regular trading.

What we don’t need tomorrow is for fears of the continued spread of the coronavirus to hook up with fears of weak earnings and revenue guidance for the current first quarter.