Amazon, Coronavirus, Caterpillar, Exxon and IBM - 5 Things You Must Know Friday

Stock futures fall though Wall Street displays cautious optimism over China's ability to contain the deadly coronavirus; Amazon.com's stronger-than-expected earnings are driven by one-day delivery offer; Exxon and Caterpillar report earnings.
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Here are five things you must know for Friday, Jan. 31:

1. -- Stock Futures Fall but Markets Get Support From Amazon 

Stock futures were falling Friday though Wall Street displayed cautious optimism over China's ability to contain the deadly coronavirus and markets reacted positively to Amazon.com's  (AMZN) - Get Report stronger-than-expected quarterly sales and earnings.

The World Health Organization declared the coronavirus, which has killed 213 people and infected a further 9,709 others, to be a global health emergency. However, WHO Director-General Tedros Adhanom Ghebreyesus praised China's efforts to contain the spread of the virus and said the WHO "doesn't recommend - and actually opposes" travel and trade restrictions to China, the world's second-largest economy.

The United States, however, issued a level four warning - the most severe warning issued by the state department - and told its citizens not to travel to China.

Goldman Sachs, meanwhile, said the coronavirus outbreak could dent China’s economic growth by 0.4 a percentage point in 2020 and also could drag U.S. growth lower.

Contracts linked to the Dow Jones Industrial Average fell 95 points, futures for the S&P 500 were down 10.45 points and Nasdaq futures tumbled 21 points.

Stocks finished higher Thursday after the World Health Organization praised the Chinese government’s response to the outbreak. The Dow rose 125 points, or 0.43%, to 28,859, the S&P 500 gained 0.31% and the Nasdaq rose 0.26%.

2. -- Amazon's One-Day Delivery Drives Profit Gains

Amazon.com  (AMZN) - Get Report rose 10.47% to $2,066.50 in premarket trading Friday after the online retailer and tech giant reported fourth-quarter earnings and sales that topped Wall Street estimates and costs for the company's one-day shipping program stabilized.

The company reported fourth-quarter earnings of $3.3 billion, or $6.47 a share, on a revenue jump of 21% to $87.4 billion as its next-day delivery shipping offers helped boost overall U.S. shipping volumes more than four times higher than last year. Costs linked to the one-day shipping plan came in under Amazon's $1.5 billion estimate, helping profit margins and efficiency.

Amazon also said it expects first-quarter operating income of between $3 billion and $4.2 billion, adding that one-day shipping costs will continue to affect its bottom line over the three months ending in March.

"What we saw was essentially very strong holiday performance from the middle of November on," Amazon Chief Financial Officer Brian Olsavsky told investors on a conference call. "We also had a very big uptick and response to the one day availability that's been building through the year. I think Prime has been very strong too."

For the first quarter of 2020, the company expects net sales to grow between 16% and 22% to $69 billion to $73 billion. Wall Street is expecting revenue of $71.64 billion.

“We’ve made Prime delivery faster - the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year,” CEO Jeff Bezos said in a statement.

The company’s Amazon Web Services cloud computing segment reported revenue of $9.95 billion, up from $7.43 billion a year earlier, and ahead of Wall Street’s expectations of $9.84 billion.

"The massive bottom line beat in the fourth quarter is restoring investor faith in Amazon's ability to generate huge profits," said Jim Cramer and the Action Alerts PLUS team, which holds Amazon in its portfolio.

If the premarket gains for Amazon hold Friday, Amazon could become the fourth U.S. company to close with a market cap greater than $1 trillion.

3. -- Caterpillar, Honeywell, Exxon and Chevron Report Earnings

Caterpillar CAT reported adjusted earnings in the fourth quarter of $2.63 a share vs. expectations of $2.37 but forecast 2020 profit below analysts' estimates amid what the machinery giant called "continued global economic uncertainty."

Honeywell  (HON) - Get Report posted fourth-quarter earnings that beat analysts' forecasts amid ongoing growth in its aerospace and building technology units and stronger demand for its supply-chain software and digital commercial offerings.

Exxon Mobil's  (XOM) - Get Report fourth-quarter adjusted earnings were weaker-than-expected and sales fell 6.6% to $67.17 billion but topped analysts' estimates.

Honeywell is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells HON? Learn more now.

The economic calendar in the U.S. Friday includes Personal Income and Outlays for December at 8:30 a.m. ET, the Employment Cost Index for the fourth quarter at 8:30 a.m., Chicago PMI for January at 9:45 a.m. and Consumer Sentiment for January at 10 a.m.

4. -- IBM's Ginni Rometty to Step Down as CEO

International Business Machines  (IBM) - Get Report said CEO Ginni Rometty will step down in April and will be replaced by Arvind Krishna, head of the company’s cloud computing business.

Rometty has been CEO since January 2012.

Krishna is currently IBM's senior vice president for Cloud and Cognitive Software. He was a principal architect of the company's acquisition of Red Hat, according to a company statement.

"Arvind is the right CEO for the next era at IBM," Rometty said in the statement. "He is a brilliant technologist who has played a significant role in developing our key technologies such as artificial intelligence, cloud, quantum computing and blockchain. He is also a superb operational leader, able to win today while building the business of tomorrow,” she added.

IBM shares were rising 3.39% to $141.40 in premarket trading.

5. -- Navistar Gets Buyout Bid From Volkswagen's Traton

Navistar International  (NAV) - Get Report shares jumped 52.31% to $36.66 in premarket trading Friday after Volkswagen unit Traton offered to buy all of the truck maker for $35 a share in cash.

Navistar said its board would review the proposal.

The company's biggest shareholder is billionaire investor Carl Icahn.

Traton produces trucks and other commercial vehicles under a variety of names including Scania. It owns a 16.76% stake in Navistar.