Coronavirus Spikes, Cisco Slumps, Nvidia and Alibaba Earnings - 5 Things You Must Know Thursday

Stock futures decline after China reports a very large spike in new coronavirus cases; Cisco issues a muted third-quarter forecast; Nvidia, Alibaba, Pepsi and Roku report earnings.
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Here are five things you must know for Thursday, Feb. 13:

1. -- Stock Futures Slump as Coronavirus Cases Spike

Stock futures declined Thursday after China reported a very large spike in new coronavirus cases using a new detection method, adding to concerns that the spread of the deadly virus has yet to be contained.

Health officials using computerized tomography techniques confirmed more than 15,000 new cases of the virus - known as Covid-19 - in Hubei province, where the disease was first identified. That boosted the cases in the province to just under 50,000 and China's nationwide total to around 60,000.

Only two of the 1,369 confirmed deaths from the disease have come from outside of China. But with the new detection methods unveiling a raft of new cases, and World Health Organization Director General Tedros Adhanom Ghebreyesus warning the outbreak "could still go in any direction," caution has replaced optimism heading into end of the trading week.

Contracts tied to the Dow Jones Industrial Average fell 211 points, S&P 500 futures slid 23.75 points and Nasdaq futures tumbled 84.75 points. 

The three major stock market benchmark indexes closed at record highs on Wednesday.

The economic calendar in the U.S. on Thursday includes the Consumer Price Index for January at 8:30 a.m. ET. Economists surveyed by FactSet expect consumer prices in the U.S. to have risen 0.2% last month with the yearly rate at 2.5%.

The calendar also include weekly Jobless Claims at 8:30 a.m.

2. -- Cisco Falls on Expectations for a Third-Quarter Revenue Decline

Cisco Systems CSCO fell in premarket trading Thursday after the networking equipment giant posted modestly stronger-than-expected fiscal second-quarter earnings but said it expects current-quarter revenue to fall 1.5% to 3.5% as global economic uncertainties lead to slowing spending in the technology industry.

The stock declined 4.71% to $47.58 in premarket trading Thursday.

Cisco posted second-quarter earnings of 77 cents a share, 1 cent ahead of Wall Street estimates, while revenue rose 3.5% to $12 billion and topped forecasts of $11.98 billion.

The company also issued a profit forecast for the fiscal third quarter, saying it expects earnings of 79 cents to 81 cents vs. analysts' estimates of 80 cents.

"Like many in our industry, we are seeing longer decision-making cycles across our customer segments for a variety of reasons including macro uncertainty as well as unique geographical issues," CEO Chuck Robbins said on a conference call. "The good news is, once this uncertainty passes for our customers, we expect to see spending recover as technology continues to be at the heart of all they do."

"Obviously, a key issue here is that customers are still taking a long time with their decision-making cycles, per management," said Jim Cramer and the Action Alerts PLUS team, which owns Cisco in its portfolio. "But as a glimmer of hope, this could change later in the year as we move past the macro uncertainties related to Brexit, China trade and so on."

3. -- Nvidia, Alibaba, Pepsi, Kraft Heinz and Roku Report Earnings

PepsiCo PEP posted stronger-than-expected fourth-quarter earnings and forecast solid sales growth for 2020 as snack revenues continues to support the company's overall top line.

Alibaba  (BABA) - Get Report posted stronger-than-expected fiscal third-quarter earnings following a record Singles Day shopping event and after rising cloud computing revenue helped boost profits for Asia's biggest tech company.

Earnings reports are also expected Thursday from Nvidia  (NVDA) - Get Report, Roku  (ROKU) - Get Report, Mattel  (MAT) - Get Report, Kraft Heinz  (KHC) - Get Report, Datadog  (DDOG) - Get Report, Yelp  (YELP) - Get Report, Aurora Cannabis  (ACB) - Get Report and Waste Management  (WM) - Get Report.

Nvidia and PepsiCo are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells NVDA or PEP? Learn more now.  

4. -- Applied Materials Issues Better-Than-Expected Forecast

Applied Materials  (AMAT) - Get Report rose 2.19% to $66.80 in premarket trading after the chipmaker's first-quarter earnings beat forecasts and its outlook for the fiscal second quarter also topped Wall Street estimates.

Applied Materials said it expects adjusted earnings in the second quarter of between 98 cents to $1.10 a share, and sales at $4.34 billion, plus or minus $200 million.

Analysts forecast adjusted profit of 91 cents a share on sales of $4.05 billion.

"Applied Materials' first-quarter earnings exceeded the top-end of our guidance, giving us great momentum entering 2020," said President and CEO Gary Dickerson. "We believe we can deliver strong double-digit growth in our semiconductor business this year as our unique solutions accelerate our customers' success in the AI-Big Data era."

5. -- MGM Resorts CEO Steps Down, Financial Targets Are Pulled

MGM Resorts  (MGM) - Get Report said long-time Chairman and CEO Jim Murren plans to step down and the casino company pulled its financial targets for 2020 because of uncertainty surrounding the coronavirus outbreak.

"As a result of the increased volatility in our business due to coronavirus as well as the market-wide weakness in Far East baccarat in Las Vegas, MGM Resorts believes it is appropriate to withdraw its fiscal 2020 full year financial targets," the company said in a statement. "Our Macau casinos are currently closed."

The Macau government last week suspended all casino operations for 15 days, forcing MGM and other gaming operators to shut down their casinos in the Chinese city.

The stock declined 4.63% to $32.10 in premarket trading.

Murren, who has been chairman and CEO since 2008, will step down prior to the expiration of his contract that runs until the end of 2021. He will continue to serve in his roles until a successor is named.

"We have a solid leadership team in place, and I am confident that they will work with my successor to continue the company's trajectory of growth and expansion," said Murren, who has been with MGM Resorts since 1998.