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Stocks - Wall Street Rebounds as Virus Fear Eases; Delphi Soars

Published 01/28/2020, 09:51 AM
Updated 01/28/2020, 09:53 AM
© Reuters.

© Reuters.

By Geoffrey Smith

Investing.com -- Wall Street opened with a bounce on Tuesday after its worst daily loss in more than three months on Monday, as fears about the novel coronavirus in China abated somewhat.

The market was undeterred by a durable goods report that suggested defense was the only sector that really enjoyed the end of 2019. Core orders excluding defense goods fell 2.5% on the month in December and November’s figures were revised down to 0.5% drop from a 0.7% increase reported originally.

Those figures cast something of a shadow over the Federal Reserve’s policy meeting, which is due to get under way later Tuesday, but chimed with a quarterly report from Lockheed Martin (NYSE:LMT), the U.S.’s biggest defense contractor, that showed profit up nearly 20% from a year earlier, thanks in part to rising sales of the F35 combat jet. Lockheed stock was up 1.0% at a new all-time high.

By contrast, industrial giant 3M (NYSE:MMM) fell 3.5% to a six-week low after saying it will cut 1,500 jobs worldwide as it comes to terms with sluggish demand out of Asia. The company’s fourth-quarter profit fell 28% due to litigation and restructuring charges.

By 9:50 AM ET (1445 GMT), the Dow Jones Industrial Average was up 85 points, or 0.3%, while the S&P 500 was up 0.5% and the Nasdaq Composite was up 0.7%.

Among the biggest movers were auto parts supplier Delphi, which surged 61% after rival BorgWarner (NYSE:BWA) announced it would buy the company in an all-stock deal valuing at $3.3 billion. BorgWarner’s stock fell 7.3% on perceptions that it is overpaying.

Elsewhere, Harley-Davidson (NYSE:HOG) fell 2.7% to a three-month low after a quarterly report that again showed its core motorcycle business in an apparently irreversible decline in the U.S. (even if it forecast flat revenues for the key division this year).

Airline stocks staged a modest recovery after tumbling on Monday, but the fear that the coronavirus will hit air travel numbers this year was still clearly in evidence. United Airlines (NASDAQ:UAL), American Airlines (NASDAQ:AAL) and Delta Airlines (NYSE:DAL) all rebounded less than 1% after declines of as much as 6% on Monday. Likewise, Booking.com (NASDAQ:BKNG) managed only a 0.2% rebound from the seven-week low it registered.

In other markets, U.S. crude oil futures were unable to hold on to earlier gains and fell 0.1% to $53.07 a barrel, while the dollar index, which tracks the greenback against a basket of currencies, rose 0.2% to a two-month high of 97.920.

Latest comments

Nothing can take this market down. Seriously. Everyone knows that the virus is and will continue to disrupt supply chains. Brief blip, then market goes higher. Earnings are being released, caveats about supply chains, brief blip, market continues higher. People are good with increasing multiples. push market higher. Admittedly this is not a good numbers based analysis, no charts, no algorithms. But so what? All of those seem to be wrong. And all I can do is sit on the sideline and not buy anything because I don't believe any of it. And I'm wrong too.
Formerly "trade optimism" now replaced by "virus fear eases". Watch for this repeat ad nauseum the next few weeks.
That cat can bounce
When market falls " Virus fear increases". When market bounce back " Virus fear eases" Guys come up with logical headlines.
hey
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