US Stock Market: NASDAQ Hits Record High Even as Apple Deals with China iPhone ProblemsThe Zhengzhou plant is “the most critical iPhone production site,” making the iPhone 11 series and a new special edition, cheaper iPhone, top Apple analyst Ming-Chi Kuo said in a note to clients Sunday.
U.S. stock markets climbed on Monday as investors shed worries over the likely economic impact of the spreading coronavirus to push the major indexes to record highs. Risk appetite started to climb in the futures markets after a lower opening shortly before the cash market opening.
While Asian investors and to some extent European and U.S. investors are trying to figure out whether the rate of contagion from the coronavirus is stabilizing even as the death toll climbed above 1,000, higher than the SARS outbreak, and one estimate put the mortality rate from the disease at 1%, U.S. investors continued to focus on corporate earnings and individual stocks.
In the U.S. cash market on Monday, the benchmark S&P 500 Index settled at 3352.09, up 24.38 or +0.75%. The blue chip Dow Jones Industrial Average finished at 29276.82, up 174.31 or +0.60% and the technology-based NASDAQ Composite closed at 9628.39, up 107.88 or +1.18%.
US Stock Market Recap
Wall Street picked up where it left off last week on Monday, with the NASDAQ hitting a record high on Monday, as a recent batch of strong domestic economic data and largely upbeat earnings overshadowed fears about the impact of the coronavirus epidemic on global growth.
The price action indicates that some people believe the outbreak may only have a negative impact on growth in China. Meanwhile, corporate earnings and U.S. economic data have been strong enough to instill confidence in U.S. investors.
Of the 324 S&P 500 companies that have reported quarterly results so far, about 71% have beaten earnings estimates, which is above the long-term average of 65%, according to IBES data from Refinitiv.
Amazon Up, Apple Down, Tesla Volatile
Amazon rose 2.6% to a record high, breaking above $2,100 per share for the first time. Netflix and Alphabet both closed more than 1% higher while Facebook eked out a gain. Tesla, meanwhile gained more than 3% in another volatile session for the electric car maker.
Notably absent from this list was Apple. Its shares fell as much as 1.9% on Monday amid concerns the outbreak will hurt production of the tech giant’s bestselling product, the iPhone. Foxconn, one of Apple’s biggest suppliers, got approval to resume production at a key manufacturing plant but only 10% of its workforce has returned, Reuters reported.
iPhone Manufacturing in China in Limbo Amid Coronavirus Outbreak
The ripple effect of the novel coronavirus outbreak in China continues this week, leaving iPhone production in the region in limbo.
Apple supplier Foxconn was approved to resume production in Zhengzhou, a key manufacturing plant in the region, Reuters reported Sunday citing an unnamed source with direct knowledge.
So far only 10% of the workforce, about 16,000 people, have returned, the source told Reuters, adding requests to reopen a plant in Shenzhen were not approved.
The Zhengzhou plant is “the most critical iPhone production site,” making the iPhone 11 series and a new special edition, cheaper iPhone, top Apple analyst Ming-Chi Kuo said in a note to clients Sunday.
Tesla’s Wild Ride Continues as Stock Tops $800
Shares of Tesla climbed as high as the $800 level it hit during last week’s wild swing.
Part of the reason appears to be positive news from China, after the Shanghai municipal government said it would help companies like Tesla “resume production as soon as possible” in the midst of the coronavirus. Tesla’s Shanghai factory has been closed as the Chinese government looks to contain the epidemic.
Tesla’s wild ride is being driven by speculation and a so-called short squeeze, detaching shares from the company’s fundamentals. As a whole, Wall Street is the most pessimistic it’s ever been about Tesla’s stock. Many analysts say Tesla’s valuation looks stretched, with nearly half of analysts having a sell rating on the stock. Just 19% of analysts say to buy Tesla’s stock.