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US open: Stocks open higher as WHO speaks on coronavirus

By Iain Gilbert

Date: Wednesday 05 Feb 2020

US open: Stocks open higher as WHO speaks on coronavirus

(Sharecast News) - US stocks opened higher for a third straight session on Wednesday as investors mulled the latest headlines related to the coronavirus outbreak.
As of 1530 GMT, the Dow Jones Industrial Average was up 0.74% at 29,020.14, while the S&P 500 was 0.77% firmer at 3,323.04 and the Nasdaq Composite came out the gate 0.18% stronger at 9,485.15.

The Dow opened 212.51 points higher on Wednesday after the previous session saw stocks attempt to regain some of the heavy losses recorded at the end of the previous week, when China's fast-spreading coronavirus sparked a sell-off on Wall Street.

Sentiment was boosted after Reuters revealed that a Chinese TV media outlet said a research team at Zhejiang University had found an effective drug to treat people with the new strain of the virus. Confirmed cases of the virus were nearing 25,000 and had already taken the lives of 490 people.

But the World Health Organization later played down the reports of a "breakthrough", stating there was "no known effective therapeutics against this 2019-nCoV (virus)" and said the last 24 hours had seen the highest amount of new cases since the beginning of the outbreak at a briefing later in the day.

Oanda analyst Edward Maya said: "Markets are still primarily focused on the coronavirus and today's news that HIV and flu drugs show promise in treating the coronavirus will keep the risk-on rally going strong.

"China's Health Commission lead researcher Li Lanjuan will propose the combination of Arbidol and Darunavir as the latest version of the government's treatment plan."

Donald Trump said on Tuesday during his State of the Union address that the US was "working closely" with Beijing to help contain the contagion.

In corporate news, Disney topped first-quarter earnings estimates overnight but warned of a $175m hit to its theme parks wing as a result of the coronavirus, while Nike shares slid after it said it had shuttered half of its stores in China.

GlaxoSmithKline dropped 3.43% and Merck shares slipped 3.55% after the multinational pharma outfits posted some disappointing quarterly results.

General Motors inched ahead 0.44% in early trade despite swinging to a fourth-quarter loss.

Qualcomm and Fox will report earnings after the close.

On the macro calendar, a closely-followed tally of private-sector job growth grew far more quickly than anticipated last month.

According to consultancy ADP, private-sector job growth jumped by 291,000 in January, beating economists' forecasts for a gain of 156,000 by a wide margin.

Elsewhere, Washington's tariffs on Beijing helped shrink the US trade deficit with China last year, but figures indicated that Americans were still turning to other countries for goods and other supplies.

The Commerce Department revealed that the deficit in exports versus imports from China shrank to $345.6bn, down about 18% year-on-year from a record high of $419.5bn in 2018. However, the US' trade deficit in manufactured goods with all countries was relatively unchanged in 2019 at close to $1.048trn.

Still on data, IHS Markit's US Services PMI was revised slightly higher to 53.4 in January, up from a preliminary estimate of 53.2 and ahead of December's final reading of 52.8.

The latest reading revealed what was the strongest pace of expansion in the service sector since March 2019.

Lastly, the Institute for Supply Management's non-manufacturing gauge rose to 55.5 in January, up from 55.0 and ahead of expectations of 55.1.

The ISM said: "The non-manufacturing sector exhibited continued growth in January. The respondents remain mostly positive about business conditions and the overall economy. Respondents continue to have difficulty with labor resources."


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