U.S. stocks were higher Tuesday, pointing to a second straight day of gains as congressional testimony from Federal Reserve Chair Jerome Powell was under way.
1:00 p.m. ET: Coronavirus means low oil prices (for now)
Capital Economics said in a research note that coronavirus jitters, which have weighed heavily on oil prices, will wane — but after the first quarter. For now, global oil markets will be oversupplied as China grapples with new infections and an economy that’s ground to a near-halt:
“The economic disruption caused by the coronavirus means that we now expect the oil market to be in a surplus in Q1 2020, as opposed to the deficit that we had previously envisioned. However, providing that the virus is contained, we think that demand will recover in the following quarters and, in conjunction with weak supply growth, will lead to a market deficit in the remainder of this year.”
The firm expects a bounce-back in demand after Q1, but warns that “risks are to the downside as the economic fallout of the virus could start to affect European and US oil consumption.”
Brent crude is up over 1% on the day around $50 (CL=F)
12:02 p.m. ET: FTC asks Big Tech companies for data about acquisitions
The Federal Trade Commission said Tuesday it requested that Google-parent company Alphabet, Amazon, Apple and Facebook provide information about mergers and acquisitions that were small enough to not need to be reported to antitrust agencies.
Previous reports have suggested the FTC is probing Big Tech companies including Facebook over potentially anticompetitive practices.
Shares of Microsoft fell 1% and shares of Facebook declined 2% intraday Tuesday amid the FTC’s statement. Last year, Facebook was fined $5 billion in a settlement with the FTC as part of a penalty for mishandling users’ personal information.
11:28 a.m. ET: Boeing logs zero new commercial airplane orders in January
Boeing did not sell any new commercial aircraft in the first month of 2020, extending a wave of woes for the company as it continues to grapple with the aftermath of two deadly crashes of its 737 Max aircraft.
The company did deliver 13 new airplanes in January, comprising six 787 Dreamliners, two 777s, two 767s and three 737NGs. No Max deliveries were recorded for January, with the 737 Max having been grounded since last March.
Shares of Boeing declined slightly after the announcement.
10:36 a.m. ET: Dow joins S&P 500, Nasdaq in hitting record highs
The Dow hit a record intraday high, joining the S&P 500 and Nasdaq, which had hit records earlier during Tuesday’s session.
Shares of chemical company Dow Inc. (DOW) rose more than 3% and led advances in the 30-stock index. Caterpillar’s (CAT) and Intel’s (INTC) stocks were each up more than 1%.
10:34 a.m. ET: Impact of coronavirus will depend on duration, magnitude of outbreak, Powell says
In testimony before Congress on Tuesday, Federal Reserve Chair Jerome Powell said the impact of the coronavirus on the U.S. economy will depend on whether the outbreak is “persistent” and “material” in nature, adding that “it’s just too early to say” what the coronavirus’s exact impact on the domestic economy will be.
And so the question is, how do we think about [the coronavirus]? Of course, first we observe the human tragedy, which is terrible to watch. The question for us really is, what will be the effects on the U.S. economy? Will it be persistent? Will it be material? That’s really the question. I think we know there will be effects on China through some part of the first half of the year and China’s close neighbors and trading partners in Europe as well as Asia. And we know that there will be some, very likely some effects on the United States. I think it’s just too early to say. We have to resist the temptation to speculate on this. And so we’ll be watching that carefully.”
10:15 a.m. ET: Powell begins delivering prepared remarks to Congress
Federal Reserve Chair Jerome Powell began delivering his prepared remarks before Congress as part of his semi-annual testimony to lawmakers on Capitol Hill.
In his remarks, Powell underscored the ongoing strength of the U.S. economy, now in its eleventh year of expansion, but highlighted the new risks posed by the spread of the coronavirus.
Here’s what Andrew Hunter, senior U.S. economy at Capital Economics, had to say about Powell’s prepared remarks:
Powell noted that while GDP and particularly consumption growth slowed last year, the recent trade truce with China and signs of improvement in the global economy had reduced some of the uncertainties around the outlook. Admittedly, Powell also acknowledged that officials are “closely monitoring” the risks posed by the new coronavirus. But, while the markets are apparently convinced that the virus will force the Fed to cut rates again by year-end, the likelihood of a US epidemic now appears low, and we expect the knock-on impact of the disruption in China to shave no more than a few tenths off first-quarter GDP growth.
As Powell began speaking, markets had priced in an about 82% probability of at least one quarter-point cut to benchmark interest rates by the end of 2020, according to CME Group data.
9:35 a.m. ET: S&P 500, Nasdaq hit record highs
U.S. stocks were higher Tuesday morning a half-hour before Federal Reserve Chair Jerome Powell delivers remarks before Congress. Both the S&P 500 and Nasdaq hit records high, and the Dow came within two points of a fresh record.
Here were the main moves in markets, as of 9:35 a.m. ET:
S&P 500 (^GSPC): +0.45% or +15.04 points to 3,367.13
Dow (^DJI): +0.32% or +84.86 points to 29,361.68
Nasdaq (^IXIC): +0.45% or +44.05 points to 9,672.44
Crude oil (CL=F): +2.08% or +$1.03 to $50.60 a barrel
Gold (GC=F) +0.28% or +$4.40 to $1,575.10 per ounce
8:02 a.m. ET: Under Armour shares slump after missing fourth-quarter sales expectations
Athletic-wear maker Under Armour (UAA) shares sank more than 13% in early trading after delivering disappointing fourth-quarter sales and projecting a revenue decline in 2020.
The company posted fourth-quarter adjusted earnings of 10 cents per share on net revenue of $1.44 billion, versus Bloomberg-compiled consensus expectations for adjusted EPS of 10 cents on net revenue of $1.47 billion. Closely watched North American sales rose just 1.9% in the quarter, short of the 2.26% rise expected.
Under Armour said it expects 2020 revenue will fall by a low-single-digit percentage compared to 2019’s $5.3 billion in full-year sales. North American sales will likely decline by a high-single-digit percentage, the company said. And Under Armour said it is considering restructuring this year, and that its outlook does not account for any costs that could arise from those potential initiatives.
Under Armour also said it sees a negative impact from the coronavirus outbreak of between $50 million and $60 million in sales during the current quarter.
7:47 a.m. ET: Stock futures rise ahead of Powell testimony
Contracts on the three major indices rose in early trading and headed toward a second consecutive session of gains as investors eyed ongoing developments with the coronavirus and looked ahead to congressional testimony from Federal Reserve Chair Jerome Powell.
Powell is set to deliver the first of two days of congressional testimony starting at 10 a.m. ET as part of his semi-annual monetary policy report to Congress. In a statement released Friday, Powell characterized 2019’s economy as having grown “moderately,” and with the labor market having “strengthened further.”
However, he also called out the coronavirus as presenting “a new risk to the outlook.”
“The recent emergence of the coronavirus,” he said, “could lead to disruptions in China that spill over to the rest of the global economy.”
To date, the coronavirus has infected 43,118 people globally, and the death toll climbed to 1,018, according to the European Center for Disease Prevention and Control. The vast majority of cases and deaths have been confined to mainland China. While some businesses in China resumed operations this week, the restart has been slow-going and fraught with issues as fears over the spread of the coronavirus continue to escalate, according to multiple reports.
Here were the main moves during the pre-market session, as of 7:49 a.m. ET:
S&P futures (ES=F): 3,362.00, up 9 points or 0.27%
Dow futures (YM=F): 29,329.00, up 84 points or 0.29%
Nasdaq futures (NQ=F): 9,567.00, up 39.5 points or 0.41%
Crude oil (CL=F): $50.56 per barrel, up $0.99 or 2.00%
Gold (GC=F): $1,573.10 per ounce, down $6.40 or 0.41%
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