Netflix, China Virus, IBM, Johnson & Johnson, Derek Jeter - 5 Things You Must Know Wednesday

Stock futures rise as China moves swiftly to limit the spread of the deadly coronavirus; Netflix's growth in the U.S. misses fourth-quarter estimates but international growth tops forecasts; IBM is higher after earnings and revenue top Wall Street expectations; Johnson & Johnson reports earnings.
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Here are five things you must know for Wednesday, Jan. 22:

1. -- Stock Futures Rise as China Virus Fears Recede

Stock futures were higher Wednesday, global stocks steadied and risk sentiment improved as China moved swiftly to limit the spread of the deadly coronavirus and investors keyed on a series of stronger-than-expected earnings reports.

China's National Health Commission said Wednesday that it has confirmed around 440 cases of the deadly coronavirus, which causes pneumonia, and nine fatalities. The government also said it was taking steps to limit the spread of the virus heading into the Lunar New Year celebrations later this week.

China's reaction to the virus, as well as its cooperation with World Health Organization officials, helped global markets steady, with investors shifting their focus to strong earnings reports from Netflix (NFLX) - Get Report, International Business Machines (IBM) - Get Report and United Airlines (UAL) - Get Report.

Contracts linked to the Dow Jones Industrial Average rose 81 points, futures for the S&P 500 were up 11.75 points and Nasdaq futures gained 55.25 points.

Stocks ended lower Tuesday after the first U.S. case of the deadly coronavirus was confirmed in Washington state and Boeing (BA) - Get Report said regulatory approval of its troubled 737 MAX would be delayed until mid-2020.

2. -- Netflix's U.S. Growth Misses Forecasts but International Beats

Netflix (NFLX) - Get Report rose in premarket trading Wednesday after the streaming giant added fewer domestic subscribers than expected in the fourth quarter but topped expectations for overseas expansion.

Netflix added 550,000 subscribers in the U.S. and Canada, below estimates of 600,000. The company pinned the miss on pricing changes and the launch of rival services in the U.S., such as those from Walt Disney (DIS) - Get Report and Apple (AAPL) - Get Report. As of the fourth quarter, Netflix began breaking up its subscriber and revenue reports into four regions: UCAN (U.S. and Canada), EMEA (Europe, Middle East and Africa), LATAM (Latin America) and APAC (Asian-Pacific).

"Our low membership growth in UCAN is probably due to our recent price changes and to U.S. competitive launches," Netflix wrote in a shareholder letter. "We have seen more muted impact from competitive launches outside the U.S. (NL, CA, AU). As always, we are working hard to improve our service to combat these factors and push net adds higher over time."

Internationally, Netflix posted 8.3 million new subscribers vs. consensus estimates of 7.2 million.

For the first quarter, Netflix guided for 7 million streaming net additions globally, short of the 8.88 million expected by analysts. 

"Our Q1 forecast reflects the continued, slightly elevated churn levels we are seeing in the U.S. plus an expectation for more balanced paid net adds across Q1 and Q2 this year," the company said.

The stock was up 1.81% to $344.22 in premarket trading.

3. -- IBM Jumps as Earnings and Revenue Top Expectations

International Business Machines (IBM) - Get Report jumped in premarket trading after the tech giant topped analysts’ fourth-quarter earnings and revenue expectations.

The company reported adjusted earnings of $4.71 a share on a 3% increase in revenue to $21.8 billion. Analysts were expecting earnings of $4.68 a share on revenue of $21.64 billion.

CEO Ginni Rometty credited “accelerated cloud performance” in the quarter as the company returned to overall revenue growth. “Looking ahead, this positions us for sustained revenue growth in 2020,” the CEO said.

The company last year completed its acquisition of Red Hat, which helped free cash flow. IBM reported a 24% increase in quarterly Red Hat revenue while total cloud revenue of $6.8 billion was a 21% increase from a year earlier.

“In 2019, we continued to invest in the higher-value growth areas of the industry and took bold actions - including several divestitures and a major acquisition - to position our business, which are reflected in our strong gross-margin performance," Chief Financial Officer James Kavanaugh said in a statement.

IBM shares were up 4.23% in premarket trading to $145.05.

4. -- Johnson & Johnson, Abbott Labs, Texas Instruments Report Earnings

Johnson & Johnson (JNJ) - Get Report earned $1.88 a share on an adjusted basis in the fourth quarter, 1 cent higher than analysts' estimates. Sales of $20.75 billion slightly missed expectations of $20. 8 billion.

Earnings are also expected Wednesday from Texas Instruments (TXN) - Get Report, Abbott Laboratories (ABT) - Get Report and Alaska Air Group (ALK) - Get Report

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

The economic calendar in the U.S. Wednesday includes the FHFA House Price Index for November at 9 a.m. ET and Existing Home Sales for December at 10 a.m.

5. -- Derek Jeter Is Elected to Baseball Hall of Fame

Yankees shortstop Derek Jeter headlined the Baseball Hall of Fame's Class of 2020, falling just one vote shy of becoming the second player to ever be voted in unanimously.

Jeter was joined by former Expos and Rockies outfielder Larry Walker in the two-person class.

Jeter, the Yankees' long-time captain, was a 14-time All-Star and five-time Silver Slugger winner. He led New York to five World Series titles, seven American League pennants and 16 postseason appearances. He fell just short of being voted in unanimously, which last year happened for the first team when Mariano Rivera received 100% of the votes.

Larry Walker made the Hall of Fame in his 10th and final year on the ballot. He played 17 seasons in MLB as part of the Expos, Rockies and Cardinals. Walker won the 1997 NL MVP, hitting .366 with NL-leading totals in home runs (49), totals bases (409), on-base percentage (.452) and slugging percentage (.720). He won seven Gold Glove awards and three Silver Slugger awards, in addition to his five All-Star Game appearances.