US OPEN: Coronavirus concerns push Wall Street off record highs

4:01 PM 13 February 2020

  • Futures point to lower open on Wall Street

  • Kraft Heinz says it made significant progress in ongoing turnaround

  • Tesla to offer $2 billion of common stock

Moods on the Asian and European stock exchanges were poor today and similarly poor opening is expected on Wall Street. Futures on major US indices point to 0.45-0.60% bearish price gaps at session launch. Spike in the number of new confirmed coronavirus cases is the reason behind an increase in risk aversion. Cisco Systems, Kraft Heinz and Alibaba are recent earnings reporters.

Nasdaq (US100) pulled back from an all-time high today, just as other major Wall Street indices did. However, the index found support at 9510-9520 pts zone that halted declines on Tuesday. An ongoing rebound off the aforementioned support looks promising and may be continued during the cash session in case no negative news on, for example, coronavirus surface. Short-term target for the rebound is of course ATH at 9626 pts. Source: xStation5

Cisco Systems (CSCO.US) reported earnings for Q4 2019 yesterday after the session closed. Dow Jones member showed revenue of $12 billion, slightly above median estimate of $11.98 billion. EPS also beat expectations sas it came in at $0.77 (exp. $0.76). However, the stock is declining in pre-market as the company said it expects sales to decline as much as 3.5% YoY in February-April period.

Kraft Heinz (KHC.US) generated earnings per share of $0.72 in Q4 2019, 6% higher than expected. However, revenue of $6.54 billion disappointed as it came below forecast of $6.61 billion. The company said that price hikes were not enough to offset drop in the US sales volumes. While Kraft Heinz admitted 2019 was a disappointing year, it also said that it sees significant progress in ongoing turnaround.

Cisco Systems (CSCO.US) failed to break above a mix of the 200-session moving average (purple line) and the support zone at $50.30 handle. The stock is indicated to launch today’s trading session lower, at around $47.20. Having said that, the support at $46 could be in play today. Source: xStation5

Alibaba (BABA.US) released a very strong report for the final quarter of 2019. Chinese e-commerce giant generated revenue of 161.46 billion CNY against expected 159.51 billion CNY. Adjusted EPS stood at 18.16 CNY (exp. 15.39 CNY). Company’s net income increased 58% YoY to 52.3 billion CNY. The company said that coronavirus outbreak increased uncertainty but it is too early to assess impact on operations.

Tesla (TSLA.US) is trading lower in the pre-market after the US carmaker said it will offer $2 billion of common stock. Elon Musk will buy $10 million of common stock while another Tesla board member will buy $1 million. The company plans to use proceeds to “further strengthen the balance sheet”.

Kraft Heinz (KHC.US) took a major dive after the release of Q4 2018 earnings a year ago. The company is expected to open lower after the release of Q4 2019 earnings as well but this time “only” 2-3% lower. Following a failed attempt of breaking back above the upward trendline yesterday, the stock may be set to retest recent low at $29.00. Source: xStation5

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