Stocks rose on Wednesday as investors tried to shake off concerns over how the coronavirus would impact corporate profits and the global economy.
The Dow Jones Industrial Average traded 201 points higher, or 0.7%, and hit a record. The S&P 500 advanced 0.6% to an all-time high while the Nasdaq Composite gained 0.7%.
As of Tuesday night, China’s National Health Commission had reported 97 additional deaths with total confirmed cases passing 44,000. However, the pace of new reported cases appears to be slowing down as they hit their lowest levels since late January.
“Investors showed resilience by pushing stocks back to all-time highs, especially in the US, anticipating a strong V-shaped recovery when this is over,” Eylem Senyuz, global macro strategist at SunTrust Advisory, said in a note. But “as the coronavirus continues to spread across China and the globe, much of its impact remains unknown.”
A man wearing a face mask rides a bicycle, as the country is hit by an outbreak of the novel coronavirus, in Beijing, China February 12, 2020.
Carlos Garcia | Reuters
Wynn Resorts and Las Vegas Sands, two stocks tied to coronavirus worries because of their exposure to the Chinese market, each rose more than 1%. Those gains follow an upgrade from a Bank of America analyst who recommended buying the stock because coronavirus cases were “leveling out.”
Delta and American Airlines climbed 1.6% and 2%, respectively.
Federal Reserve Chairman Jerome Powell on Tuesday testified in front of the House Financial Services Committee that the American economy is in a good place, but that the central bank is “closely monitoring” the potential global economic fallout from the virus.
Powell testified again in front of the Senate Banking Committee on Wednesday, noting the central bank should have an idea of the coronavirus’ impact on the U.S. economy “fairly soon.”
Corporate earnings remained in focus after Lyft reported more than $1 billion in quarterly revenue, but forecast slower growth in 2020. Lyft shares slid 6.9%.
CVS Health, Molson Coors, Teva Pharmaceutical and Shopify all reported quarterly results that beat analyst expectations. About 70% of S&P 500 companies have posted calendar fourth-quarter results. Of those companies, 71.1% have beaten analyst expectations, FactSet data shows.
“We have been saying that future stock gains would require P/E multiple expansion,” said Nick Raich, CEO of The Earnings Scout. “That is exactly what is happening.”
“Taking into account the Fed’s accommodative policies and the elevated valuation levels for the S&P 500, we want you to participate in the stock rally. However, we do not want you to be greedy,” he added.
—CNBC’s Elliot Smith contributed to this report.
