Plus, the UN has called for an investigation into whether the Saudi Crown Prince was involved in hacking Amazon’s Bezos’ iPhone, Tesla got another upgrade, and Boeing said it doesn’t expect regulatory approval for its 737 Max until mid-year.
Stocks opened higher Wednesday with the Dow adding 124 points at the open. The S&P 500 and Nasdaq both added 0.2%.
China unveiled measures to rein in the deadly coronavirus that has killed 17 and infected more than 500, easing fears in the market. Chinese health officials said in a briefing that they have stepped up monitoring of transportation links and have ordered a near-complete shutdown of Wuhan, the city where the virus originated from. The World Health Organization will decide today whether to declare the outbreak an international public health emergency, a designation that’s used for complex epidemics that can cross borders. Outside of China, the pneumonia-like virus has confirmed cases in Thailand, Japan, South Korea, Taiwan, and the United States. Goldman Sachs warned in a note to clients that the coronavirus outbreak could shave $3 from oil prices if there’s a significant slowdown in air travel. “Ultimately we expect jet fuel markets—including cracks, regrade and Asian differentials—to decline most if this outbreak persists given the likely decline in regional air travel,” wrote Goldman analyst Damien Courvalin.
The UN has called for an investigation into the “possible involvement” of Saudi Crown Prince Mohammed bin Salman in the hacking of Amazon CEO Jeff Bezos’ iPhone back in 2018. “The information we have received suggests the possible involvement of the Crown Prince in surveillance of Mr. Bezos, in an effort to influence, if not silence, The Washington Post’s reporting on Saudi Arabia,” UN special rapporteurs said in a statement today. “The alleged hacking of Mr. Bezos’ phone, and those of others, demands immediate investigation by U.S. and other relevant authorities, including investigation of the continuous, multi-year, direct and personal involvement of the Crown Prince in efforts to target perceived opponents.” Bezos’ phone was hacked following an exchange he had with the Crown Prince over WhatsApp in 2018, and was infiltrated via an MP4 video file sent from the WhatsApp account used by the Prince.
Tesla shares have gained nearly 8% this morning, reaching a $100 billion market cap for the first time. The electric car maker is now worth more than Volkswagen. Wedbush analyst Daniel Ives wrote in a note to clients that they can expect strong delivery guidance from Tesla when it releases earnings on January 29. “While Tesla shares remain on an historic rally heading into earnings, the bull party likely continues as the aggressive trajectory of Giga 3 production and demand out of Shanghai look very strong out of the gates,” Ives wrote. “In our opinion, the new long term bull case scenario on the stock is $900 with Tesla’s ability to ramp production and demand in the key China region during the course of 2020/2021 a major swing factor on the stock.”
Boeing shares have taken a tumble following the company announcing another delay in bringing the grounded 737 Max jet back into service. The company said yesterday that it doesn’t expect regulators to sign off on the plane until the middle of 2020, months later than the manufacturer had previously expected. Vertical Research Partners analyst Rob Stallard downgraded Boeing, writing in a note, “It could get worse before it gets better. The ramifications of this [delay] have yet to reverberate – from a Boeing perspective, this means over a year without deliveries of its most profitable product line, while customer compensation costs are likely to be higher than previously thought.”
And Express shares are up 19.5% this morning after the clothing retailer said it plans to shutter around 100 of its stores by 2022 as part of its strategy to save $80 million in costs annually over the next three years. Express also said that it plans to relaunch a loyalty program and private-label credit card, and plans to spend $50 to $60 million annually to improve online sales technology and revamping stores. “This will of course take some time, but we have a clear path,” said CEO Tim Baxter. “When I joined Express, I outlined three priorities: changing the trajectory of the business, developing a corporate strategy, and putting the right team in place. We have spent the past six months developing a strategy with the intent to return Express to long-term growth and a mid-single digit operating margin. Today we took the necessary steps to put the right organization in place to support that strategy.”
Stocks We’re Watching
Owens & Minor (NYSE: OMI): Owens & Minor shares are up more than 3% today and nearly 34% over the last week after the healthcare solutions company said it will sell its Movianto European logistics business to France’s EHDH holding company. Baird analysts then said yesterday that Owens & Minor investors will see “attractive returns in 2020” as the analysts see “turnaround progress” as the company sheds its profit-challenged European business to focus on more lucrative opportunities.
Myos Rens Technology (NASDAQ: MYOS): Myos Rens shares are up 24% over the last week following the company’s announcement that it will present updated on its clinical research at the North American Veterinary Meeting & Expo this week. “Since the launch of MYOS Canine Muscle Formula in 2018, it has become clear that this is a product that has disruptive potential in the canine muscle health space,” said Joseph Mannello, CEO of MYOS. “This is evidenced not only by the incredible testimonials that we continue to receive from dog owners across the country regularly, but from positive results from clinical studies that we have sponsored such as the Kansas State University TPLO study wherein dogs who consumed Fortetropin recovered faster from the surgery and had experienced less atrophy of disuse in the leg that was operated on. As we continue to grow our business, Animal Health remains one of our most exciting areas of focus. We are committed to developing MYOS Canine Muscle Formula into a brand that dog owners across the country will not only recognize but utilize as an essential nutrition product.”