Tuesday, January 21, 2020
Market futures are in the red this Tuesday morning, after a three-day weekend that celebrated Martin Luther King Jr. in the U.S. yesterday. Coming off new all-time highs here at home, fears of a new coronavirus coming out of central China caused Asian markets to sell off overnight. Now domestic traders appear to be following suit.
The death toll from this coronavirus — which originated in the city of Wuhan on the Yangtze River, between Shanghai and Chongqing — has reached 6 as of this morning, with nearly 300 having fallen ill from the virus. Face masks in the region are selling out of stores, as many believe person-to-person contact is how the disease is being spread. Even more on the minds of the Chinese citizenry is the upcoming Lunar New Year celebration later this month; with the holiday marking the busiest travel time of the year in China, fears are the virus could spread throughout the country.
The coronavirus is reminiscent of the SARS epidemic from the early 2000s. It also began as an unknown coronavirus in China, and made its way as far as New York City before it was corralled. This time, the first market sell-offs came for the travel industry stocks in China: hotels, airlines, travel technology, etc. The Shanghai composite fell 1.4% on Tuesday, and the Hang Seng came down 2.8%. In the U.S. we see the Dow down 74 points, the Nasdaq -32 and the S&P 500 -11.
Meanwhile, President Trump meets with some of the wealthiest world and business leaders today at the 50th World Economic Forum in Davos, Switzerland, while at home the U.S. Senate plans to open impeachment hearings against Trump. After today’s market closes, we’ll get our first of the FAANG stocks reporting this quarter: Netflix NFLX. Zacks currently has a #3 ranking on its shares, and expects 51 cents on the bottom line and revenues of $5.44 billion on the top. Netflix has not missed earnings estimates since Q3 2017.
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