US OPEN: Dow set to drop 800 points at session launch

1:35 PM 24 February 2020
  • Futures point to a carnage at Wall Street open

  • Bernie Sanders wins Democratic Party primaries in Nevada

  • Buffett does not see current M&A valuations as opportunity

Surge in the number of new coronavirus cases outside China has doomed equities in Asia and Europe today. US equities are unlikely to buck this trend as the futures market points to the S&P 500 index opening 2.3% lower. In other news, Bernie Sanders scored a big win in Nevada primaries while Warren Buffett’s Berkshire Hathaway released full-year results.

Bernie Sanders wins Nevada primaries

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

Bernie Sanders won Democratic primaries in Nevada, securing a support of 47.1%. Joe Biden received 21% of the votes while Pete Buttigeg had a support of 13.7%. The results cover 88% of the votes. Sanders has won all three primaries that were already held (Iowa, New Hampshire and Nevada) and is on his way to become November’s challenger to incumbent president Donald Trump. However, Nevada results may be misleading as Sanders’ biggest competitor - Michael Bloomberg) did not take part in primaries in the state. The real test for Sanders and Bloomberg will be next week, when the so-called Super Tuesday is held (Tuesday, March 3). Primaries will be run in 14 states on this day and support of 34% of all delegates is at stake. 

US30 (Dow Jones futures underlying) is trading 2.5% lower today. The index tests the key support ranging between 28150 pts handle and the lower limit of the Overbalance structure (yellow box). The zone is additionally being strengthened by the 100-session moving average (red line). Unless some upbeat news on coronavirus see daylight later today, index’ trading may be focused on the aforementioned 28150 pts handle throughout the session. Source: xStation5

Berkshire Hathaway (BRKB.US) published Q4 and full-2019 earnings on Saturday. Company’s Q4 adjusted net profit of $4.42 billion was almost 30% lower than the median estimate compiled by Bloomberg. However, the company booked a $24.7 billion one-off gain, putting its unadjusted net profit at $29.16 billion. Revenue of $65.368 billion, trailed estimate by 1.7%. Full-2019 revenue grew 2.7% to $254.62 billion. Full-year net income of $23.972 billion was 45% higher than expected and 3.2% YoY lower.

Warren Buffett, chairman of the Berkshire Hathaway, expressed regret in his annual letter to shareholders over inability to find the next big acquisition. Buffett said that current M&A valuations do not create an opportunity and his company is likely to resort to buying smaller, non-controlling stakes in companies. The letter also renewed discussion over succession as chairman Buffett will turn 90 this year while vice-chairman Munger turned 96 on New Year’s Eve. In the letter Buffett said that two executives holding vice-chairman roles - Ajit Jain and Greg Abel - will have their presence increased at the incoming annual shareholder meeting in May. The two are has been named as potential successors to Buffett for some time already but this year’s letter did not hint on who is the front-runner.

Berkshire Hathaway (BRKB.US) bounced off the 50-session moving average (green line) at the end of the previous week. However, the stock is still trading below intraday ATH of €231.6 reached on January 17. The company's adjusted beta calculated with monthly returns over the previous 30 years stands at 0.73, hinting that Berkshire Hathaway may be more resilient than S&P 500 today. However, in case the market's plunge continues to gather pace, the stock may be set to test support at $223. Source: xStation5

Global stock markets are being roiled by coronavirus concerns. However, it does not mean that each and every stock is trading lower. Investors pour their money into shares of medical companies that announced they are working on vaccines for the novel coronavirus. Novavax (NVAX.US) is one such company. Shares are benefiting from recent rise in new coronavirus cases and trade over 15% higher in premarket. Co-Diagnostics (CODX.US) is also on the rise with shares trading 10% higher in premarket. The company recently submitted a COVID-19 diagnostic test for registration in Europe.

While miner stocks are sinking with commodities today, there is a group of miners that buck the trend - companies involved in precious metals mining. Newmont (NEM.US), the world’s largest gold miner, is an example. The company trades around 5% higher today, being fuelled by gold price surge and upbeat recommendation from CIBC. Analysts praised the company's earnings announced last week and decided to boost recommendation from “neutral” to “outperform”.

Newmont (NEM.US) gains on the ongoing gold market rally. Gold miner failed to reach the $50 resistance zone at the end of the previous week. However, premarket trades point to open near $52 handle, thanks to a 2% increase in gold price today. In such a scenario, the aforementioned $50 zone could serve as a floor today. The next major resistance in line is zone at 78.6% Fibo level of a drop started in late-2011. Source: xStation5

Share:
Back
Xtb logo

Join over 935 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol cc 2 March 2024
test_cookie cc 25 January 2024
adobe_unique_id cc 1 March 2025
__hssc cc 8 September 2022
SESSID cc 2 March 2024
__cf_bm cc 8 September 2022
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid cc 9 September 2022
_gat_UA-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 30 May 2024
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
__hstc cc 7 March 2023
__hssrc

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 7 March 2023

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language