By Yasin Ebrahim
Investing.com – The S&P closed in record territory Wednesday as investors bet that efforts to contain the outbreak of the coronavirus and support from the central banks will limit its impact on global growth.
The S&P 500 rose 1.13% and the Nasdaq Composite rose 0.43%, both record closes. The Dow Jones Industrial Average gained 1.68%.
The coronavirus outbreak appears to be gathering pace, with the death toll nearing 500, and more than 24,000 infected. But traders appear optimistic that efforts to contain the outbreak will begin to take shape sooner rather later and any potential economic fallout will be stifled by central banks.
That eased worries about the impact on China oil demand, sparking a bid in oil prices that powered energy stocks up 3.7%, marking the sector's biggest gain since December 2018.
A slump in Tesla (NASDAQ:TSLA) and Snap (NYSE:SNAP), however, took some shine off the rally on Wall Street.
Tesla fell 17% as Canaccord downgraded its rating on the stock from buy to hold, citing concerns about the impact on the production in China amid the outbreak of the coronavirus.
"Following an electrifying run in 2020, we are downgrading shares of Tesla to hold as we see a balanced risk-reward for investors to lock in profits," Canaccord said. "Just as we observed a clear buy signal coming into 2020, we see the risk of China's coronavirus as a clear headwind to the Shanghai facility, suggesting a more pragmatic position."
Tesla reportedly plans to delay the shipment of deliveries in China due to the coronavirus, casting doubt on whether the company will meet its guidance on deliveries for the full year.
Snap, meanwhile, plunged 15% after reporting quarterly revenue that fell short of estimating amid weaker-than-expected average revenue per user (ARPU) – a measure used to gauge the performance of social media companies.
Elsewhere on the earnings front, Ford Motor (NYSE:F) faced a wave of selling pressure, falling 9.5% after missing quarterly earnings estimates. And Disney's (NYSE:DIS) better-than-expected subscriber numbers for its streaming service Disney+ were offset by an expected hit in operating income due to closure of its China theme parks. It was down 2.3%.
In a sign that the economy remains on solid footing, private jobs increased more than expected last month and services activity, which makes up more than two-thirds of economic growth, topped economists' forecasts.