Wall Street turned early gains into losses as new coronavirus cases in Italy and a spike of cases in Iran and elsewhere in the middle east provided the latest drivers of concern about the disease's spread. MasterCard and United are the headliners among another batch of companies that have warned that they won't achieve their previously stated targets, or pulled those targets, due to COVID-19.
ECONOMIC EVENTS: In the U.S., the Case Shiller's 20-city home price index rose 0.04% to 218.73 in December. The FHFA home price index rose 0.6% to 283.0 in December. The Richmond Fed index tumbled 22 points to -2 in February, which was weaker than expected. The Conference Board's Consumer Confidence Index improved slightly in February to a reading of 130.7, up from 130.4 in January.
TOP NEWS: Shares of Home Depot (HD) are up about 2% after the home improvement giant reported beter than expected fourth quarter sales and profits, stating that the results "reflect strength in our core business, solid execution around our holiday events and the overall health of the consumer." The company, which back its FY20 revenue growth guidance of 3.5%-4%, also raised its quarterly dividend 10% to $1.50 per share.
Moving in the opposite direction following its own quarterly report, Macy's (M) is down 4% near noon despite CEO Jeff Gennette contending that the company "executed well during the Holiday 2019 season." The department store operator, which pointed to 2020 being a "year of transition," noted that it was "pleased with the significant trend improvement in the fourth quarter, including a meaningful sales uptick in the 10 shopping days before Christmas."
Last night, MasterCard (MA) warned that cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the coronavirus. As a result, the company now expect that if the trends seen recently continue through the end of the quarter, year-over-year net revenue growth in the first quarter will be approximately 2-3 percentage points lower than discussed on its January 29 earnings call. This morning, Mastercard announced that Ajay Banga, President and CEO, will transition to the role of Executive Chairman of the board on January 1, 2021. Michael Miebach, Chief Product Officer, has been elected to become CEO to succeed Banga.
Also issuing a coronavirus warning, United Airlines (UAL) withdrew its FY20 guidance due to the disease outbreak.
HP Inc. (HPQ), in addition to reporting earnings, announced a new buyback authorization as well as an incremental cost savings plans. HP also said it believes there is "merit in industry consolidation," but that the revised Xerox proposal announced on February 10 is "fundamentally flawed" and meaningfully undervalues HP. HP noted that it is reaching out to Xerox to "explore if there is a combination that creates value for HP shareholders that is additive to HP's strategic and financial plan."
In M&A news, Intuit (INTU) confirmed last night that it has agreed to acquire Credit Karma, the consumer technology platform with more than 100 million members in the U.S., Canada and U.K., for approximately $7.1B in cash and stock.
MAJOR MOVERS: Among the noteworthy gainers was Mallinckrodt (MNK), which rose 17% after it rpeorted quarterly results and announced a $1.6B global opioid settlement through Chapter 11 for its specialty generics-focused subsidiaries. Also higher was Moderna (MRNA), which gained 16% after it announced that it has released the first batch of mRNA-1273, the company's vaccine against the novel coronavirus, for human use.
Among the notable losers was Cornerstone OnDemand (CSOD), which dropped 28% after reporting earnings and announcing it has entered into a definitive agreement to acquire Saba, a player in talent experience solutions and a portfolio company of Vector Capital, in a cash and stock transaction valued at approximately $1.395B. Also lower was Tupperware Brands (TUP), which plunged 43% after it provided a downbeat outlook for fiscal 2019 and fiscal 2020.
INDEXES: Near midday, the Dow was down 280.65, or 1.00%, to 27,680.15, the Nasdaq was down 68.14, or 0.74%, to 9,153.14, and the S&P 500 was down 30.00, or 0.93%, to 3,195.89.
