Despite Record Highs, Coronavirus Concerns Grip Wall Street

All three benchmarks logged multiple record highs this week

by Patrick Martin

Published on Feb 14, 2020 at 2:20 PM

It was an up-and-down week on Wall Street, with momentum largely dictated by the coronavirus outbreak. The Dow rose to record highs when it looked like there was an outbreak slowdown, but pulled back when more cases were reported just one day later. The S&P 500 and Nasdaq logged four-day win streaks earlier in the week and turned in their fair share of record highs as well. As Friday draws to a close, all three benchmarks are cruising toward their second-straight weekly win, all amidst a drop in investor bullishness.

Earnings, Mergers, and Politics Shape Wall Street

There was a full slate of corporate earnings to unpack this week as well. Notable winners include drug stock Teva Pharmaceuticals (TEVA) and Waste Management (WM), the latter of which flashed an intriguing bullish signal. Toy stock Hasbro (HAS) even brushed off a revenue miss, thanks to big sales numbers from its Star Wars and Frozen franchises.

But it wasn't all sunshine and rainbows. Retailer Under Armour (UAA) took a hit after cutting its 2020 forecast, while a same-store sales dip dug into Bed Bath & Beyond (BBBY). Blue chip Cisco Systems (CSCO) weighed on the blue-chip index after a surprise guidance cut.

Elsewhere on Wall Street, the Sprint - T-Mobile merger finally happened, sending the former to a two-year high. Bernie Sanders' slimmer-than-expected Democratic primary win in New Hampshire lifted UnitedHealth (UNH) and sparked a flurry in UNH's options pits. Spin-off rumors swirled around L Brands (LB), and a C-Suite shakeup rattled one casino stock.

Next Week: Walmart's Turn in the Earnings Confessional

Going forward, be wary that more stocks like Royal Caribbean Cruises (RCL) could trim their guidance due to the coronavirus outbreak. And it's not just individual equities; this struggling energy exchange-traded fund (ETF) has crumbled as the outbreak intensified. Instead, take a look at these two social media stocks with cheap options, or this red-hot chip stock.

Next week will be holiday-shortened due to Monday's market closure in honor of President's Day. But after that, Walmart (WMT) will be in the earnings spotlight, and investors will have the latest Fed minutes to look forward to. In the meantime, here's a primer on how to play sharp volatility pullbacks.


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