Plus, China announced it will halve tariffs on $75 billion worth of U.S. goods, and Yum! Brands warned that it could fall short of its outlook as the coronavirus outbreak weighs on its sales in China.
Stocks were little changed to start Thursday with the Dow trading just below the flatline shortly after the open. The S&P 500 and Nasdaq also both traded around the flatline.
President Donald Trump was acquitted on both counts by the Senate yesterday, with Mitt Romney the sole republican to vote to remove Trump from office on the abuse of power charge. Trump tweeted yesterday afternoon that he would be making a statement from the White House today at 12:00pm EST “to discuss our Country’s VICTORY on the Impeachment Hoax!” and later posted a video in which a narrator describes Romney as “slick, slippery, stealthy” while accusing the senator of “posing as a Republican” and taunting him for his failed presidential bid in 2012.
Total cases of the coronavirus have surged to more than 28,000 worldwide, while the death toll is at least 565 as of Thursday morning. The U.K. confirmed a third case of the virus there today, while Vietnam confirmed two new cases of the coronavirus, bringing that country’s total to 12. In a press conference this morning, the World Health Organization said it is inviting scientists from all over the world to a two-day international research forum beginning on February 11. “There’s still a lot we don’t know,” said WHO Director General Tedros Adhanom Ghebreyesus. “We don’t know the source of the outbreak. We don’t know what its natural reservoir is and we don’t properly understand its transmissibility or severity. To put it bluntly, we’re shadow boxing. We need to bring this virus out into the light so we can attack it properly.”
China announced that it will halve tariffs on hundreds of U.S. good worth about $75 billion. The retaliatory tariffs on some goods will be cut from 10% to 5%, and from 5% to 2.5% on others, according to China’s Ministry of Finance, and will take effect on February 14. The move reciprocates action taken by the U.S. and satisfies part of the “phase one” interim trade deal signed last month. More than 1,700 products are included in the tariff reduction, including soybeans, American cars, oil and gas, seafood, and poultry. The Chinese Finance Ministry said the measures were in a bid “to promote the healthy and stable development” of economic and trade relations between the U.S. and China, adding that it hoped to work with the U.S. to eliminate all increased tariffs.
Yum! Brands shares are down 5% this morning after the company said that its 2020 results could fall short of its long-term outlook as the coronavirus outbreak weighs on sales in China and Pizza Hut struggles to turnaround its business in the U.S. “While Yum’s business model is highly diversified such that the impact on our financial performance will not be as significant as what many companies will experience, this will certainly be a headwind for 2020,” said CEO David Gibbs. The Taco Bell-parent also delivered mixed Q4 earnings results with adjusted earnings per share coming in at $1, versus $1.13 expected, on revenue of $1.69 billion, compared to the $1.66 billion expected by analysts. Yum also said that it expects to close its acquisition of Habit Restaurants—which owns Habit Burger Grill—in the second quarter.
And Twitter shares have soared more than 17% higher this morning after the social media company reported Q4 earnings that beat on revenue and active user expectations, but fell short on profit. Twitter said it experienced the fastest quarterly growth of Monetizable Daily Active Users (mDAUs) with the metric gaining 21% in the fourth quarter. In a statement, Twitter said that more than half of the 26 million daily users it added in 2019 were “directly driven by product improvements,” and said that its daily user base grew by “double-digit increases in all of our top 10 markets.” CEO Jack Dorsey said on a call with analysts that he sees Twitter “more as an interest network than a social network” and plans to push further into products that highlight that distinction, though he added that the company is still too slow when it comes to launching new products and features. “The time it takes to go from an idea to shipping something wonderful to customers still takes too long,” Dorsey said.
Stocks We’re Watching
Innovative Solutions & Support (NASDAQ: ISSC): IS&S gained nearly 2% yesterday after it announced its fiscal Q1 results. The systems integrator for cockpit display systems reported that its net sales increased 12.5% year-over-year to $4.5 million, and said that its new orders in its fiscal 2020 were $4.9 million while its backlog was $6.3 million, representing a 47% increase from its backlog in the same period last year. “The results for the first quarter of fiscal 2020 continue to reflect steady improvement in our financial performance as well as success qualifying new products and wining new orders,” said IS&S Chairman and CEO Geoffrey Hedrick.
Coty Inc (NYSE: COTY): Coty shares jumped as much as 22% yesterday after the cosmetics giant beat earnings expectations for its fiscal Q2. Coty reported its adjusted earnings came in ahead of consensus estimates at $0.24 per share, while revenue was in line with expectations at $2.3 billion. “Out turnaround plan has now been underway for two quarters, and we are confident that the actions we are taking will build a much healthier business and growth,” said CEO Pierre Laubies, while also noting momentum in Burberry, Gucci, Tiffany, and Hugo Boss brands, as well as a growing footprint in luxury cosmetics.