Investors appear to be taking some comfort from the measures Beijing has taken to contain the virus to Hubei province and to support economic growth. Still, travel restrictions continue and business shut-downs mount, with Macau closing casinos for another two weeks. Bulls have focused on strong corporate earnings and assurances of support from central banks.
The coronavirus has infected more than 20,000 people in China and claimed 465 lives, according to China’s National Health Commission. The People’s Bank of China offered funds in the overnight market to the tune of 500 billion yuan ($71 billion) on Tuesday to ease the economic stress of containing the viral outbreak, according to The Wall Street Journal. This follows an initial injection of 1.2 trillion yuan into the Chinese banking system on Monday.
Markets have been fairly upbeat on the back of efforts by the PBOC to contain the virus and its attempts to stanch economic fallout for China.
Politics also were drawing outsize attention in Tuesday trade as investors awaited a State of the Union address at 9 p.m. Eastern Time.
Wall Street investors focused on the Democratic race for the 2020 presidential nomination, after technology problems and reporting inconsistencies kept Iowa Democratic Party officials from releasing results from Monday’s caucus, the first contest in a six-month process.
Pete Buttigieg was leading narrowly in long-delayed results in the Iowa caucuses Tuesday, appearing to cement his status as a credible moderate alternative to Bernie Sanders. after an extraordinary rise from little-known mayor of a small Indiana city to the top tier of the presidential race. Vermont Senator Sanders rallied his enthusiastic voter base to the second spot in the first contest for the Democratic nomination with 62% of the precincts reporting.
Sen. Bernie Sanders, the Vermont independent, released figures showing he was in front, while the former mayor of South Bend, Ind., Pete Buttigieg, claimed victory, saying that “by all indications, we are going on to New Hampshire victorious.” New Hampshire will be the location of the second primary contest for Democrats on Feb. 11.
A victory for Sanders or Sen. Elizabeth Warren could be a headwind for markets, stoking concern among investors of the potential for higher taxes, antitrust probes, and restrictions on drug prices.
Trump, meanwhile, is expected to be cleared by the Senate on Wednesday in his impeachment trial.
Economic data was light Tuesday, although the Commerce Department said factory orders rose 1.8% in December, beating expectations for a 1.5% rise among economists surveyed by MarketWatch.
“The lesson of today’s stock market rally is that while the coronavirus is a risk, it is not a material risk to the economic outlook which backstops corporate earnings always,” said an expert. “Coronavirus doesn’t increase the odds of a U.S. recession this year.”
Fourth-quarter earnings season is roughly halfway done, with S&P 500 companies expected to have increased earnings by 1.6% in the period, according to IBES data from Refinitiv. However, earnings in 2020 are expected to rise 8.7%.
About 8 billion shares changed hands in U.S. exchanges, above the 7.6 billion daily average over the last 20 sessions.
Shares of Google parent Alphabet Inc. fell 2.6% and 2.5%, respectively, after it reported revenue below Wall Street estimates late Monday. The company also is being probed over location tracking by the Irish Data Protection Commission.
Shares of Apple Inc. gained 3.3% after a report that the company’s suppliers planned to resume full-scale production Feb. 10, despite coronavirus concerns.
Shares of Tesla Inc surged 13.7% after the electric-vehicle maker drew bullish endorsements from investors and research analysts. Tesla shares jumped nearly 20% to an all-time high on Monday and are up nearly 112% year to date.
Shares of eBay Inc. shot up 8.8% after The Wall Street Journal reported that Intercontinental Exchange Inc. has approached the e-commerce company multiple times regarding a takeover.
By: via @AlliesFin Serve T.ME/ALLiESFiN
