e situation deteriorates, and comparisons to the 2003 outbreak of severe acute respiratory syndrome (SARS) have been widespread, there are important differences,” J.P. Morgan, chief of global research, Joyce Chang wrote in a note.
“First, the Chinese government has taken serious actions much faster this time. Second, the mortality rate of the current coronavirus outbreak is 2-3% compared to +10% for SARS, and the vast majority of current casualties have been concentrated in elderly people with pre-existing conditions,” Chang said.
Investors are also digesting U.S. corporate earnings reports Tuesday. Apple is among the S&P 500 index components set to report after Tuesday’s close. Apple suppliers cautioned coronavirus could impact the phone maker’s planned production hike.
Companies are beating earnings estimates by 5% thus far, a number in line with the post-crisis median but the best beat rate since 1Q19. But “there is a major gap between earnings revisions and year on year performance suggesting continued positive earnings momentum is needed to help support price momentum.
*In U.S. economic data, December durable goods orders surged 2.4% in December owing to defence spending, but business investment in the civilian part of the economy declined again to finish the year on a weak note. Excluding defence spending durable goods orders sank 2.5% and the government revised orders for November to show an even bigger 3.1% drop. The weakness in orders and business investment could be a drag on the economy in 2020 unless it turns around.*
*The U.S. S&P CoreLogic Case-Shiller 20-city house price index increased 2.6% in November versus a year ago. At the national level, home prices were up on an annual basis by 3.5%, representing a faster rate of home-price appreciation than was recorded in October.*
*Meanwhile, U.S consumer confidence was running high at the start of 2020, hitting its highest level in five months. The Conference Board’s index of consumer confidence climbed to 131.6 in January from a revised 128.2 in the prior month.*
Expectations for fourth-quarter earnings have been slowly improving and are now expected to show a decline of 0.4%, according to Refinitiv data. Of the 104 companies that have reported so far, 68.3% have topped expectations, lagging the average rate of 74% from the past four quarters.
*Results were mixed on Tuesday…*
*Apple* stock was the best performing Dow constituent, gaining 2.8% ahead of its earnings report after the market close Tuesday.
*3M Co.* share closed 5.7% lower Tuesday, after the consumer and industrial products company reported fourth-quarter profit that fell short of Wall Street expectations, while revenue matched. 3M also said it was cutting 1,500 jobs as part of a restructuring.
Dow component, United Technologies Corp. gained 1.2% after it reported profit and sales that beat estimates.
*Pfizer Inc.* shares lost 5% after the drugmaker reported profit that missed expectations, while revenue rose in line with forecasts… and said it would no longer rely on share repurchases to help drive growth.
*Xerox Holdings Corp*. shares rose 4.9% after delivering a fourth-quarter profit that topped expectations.
About 6.75 billion shares changed hands in U.S. exchanges, compared with the 7.4 billion-share daily average over the last 20 sessions.
*Back in Europe*, Brexit is back in focus with the U.K. set to leave the European Union on Friday, beginning a transitional period in which both sides work toward the ambitious target of agreeing a new free trade agreement this year.
EU chief negotiator Michel Barnier warned the U.K. on Monday that the bloc will “never, never, never” compromise on the single market, accusing Britain of underestimating the cost of leaving.
Meanwhile, the U.K. granted Chinese telecoms giant limited access to its 5G network on Tuesday, defying pressure from the U.S. to shut the company out over alleged national security concerns.
Oil prices were supported by speculation that OPEC would step in if necessary. According to a report from Reuters, OPEC officials we
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