Coronavirus Breakthrough, State of the Union, Disney and Ford - 5 Things You Must Know Wednesday

Stock futures surge on reports from China of a possible breakthrough in treatment for the coronavirus; Donald Trump touts the economy in his State of the Union speech; Disney+ subscribers rise to nearly 29 million.
Author:
Updated:
Original:

Here are five things you must know for Wednesday, Feb. 5:

1. -- Stock Futures Surge on Report of a Coronavirus Breakthrough

Stock futures surged Wednesday and global stocks rallied following reports from China of a possible breakthrough in treatment for patients infected by the deadly coronavirus.

Researchers at Zhejiang University were reported to have found a drug that will effectively treat patients suffering from the respiratory illness that has killed nearly 500 people and infected nearly 25,000 more.

Stock futures reversed earlier declines on the reports with contracts tied to the Dow Jones Industrial Average now rising 200 points, S&P 500 futures up 22 points and Nasdaq futures jumping 73.75 points. 

The gains followed Wall Street's broad rally in the previous session that saw the Dow jump more than 400 points and the tech-heavy Nasdaq record an all-time high.

The economic calendar in the U.S. Wednesday includes the ADP National Employment Report for January at 8:15 a.m. ET, the ISM Non-Manufacturing Index for January at 10 a.m. and Oil Inventories for the week ended Jan. 31 at 10:30 a.m.

Merck (MRK) - Get Report reported fourth-quarter adjusted earnings of $1.16 a share, 1 cent higher than analysts' estimates but sales of $11.87 billion, an increase of 8% from a year earlier, came up short.

Merck also said it will spinoff its women's healthcare division into a separate company as it focuses on "growth pillars" in oncology, vaccines and hospital and animal health.

Reports are also expected Wednesday from Qualcomm (QCOM) - Get Report, General Motors (GM) - Get Report, Fox Corp. (FOXA) - Get Report, FireEye (FEYE) - Get Report, GoPro (GPRO) - Get Report, Grubhub (GRUB) - Get Report, Twilio (TWLO) - Get Report and Peloton Interactive (PTON) - Get Report.

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

2. -- Donald Trump Touts Economy in State of the Union Speech

Donald Trump put the economy front and center in his third State of the Union address on Tuesday, effectively kicking off his re-election campaign by ticking off the many economic milestones achieved since he took over as president.

“Jobs are booming, incomes are soaring, poverty is plummeting, crime is falling,” Trump said at the beginning of his speech. “Confidence is surging, and our country is thriving and highly respected again.”

Trump said that 7 million new jobs had been created since he took office, and noted that the country’s jobless rate was the lowest in more than half a century. 

Trump took full credit for the gains, saying that “from the instant I took office, I moved rapidly to revive the U.S. economy, slashing a record number of job-killing regulations, enacting historic and record-setting tax cuts and fighting for fair and reciprocal trade agreements.”

He also boasted about the stock market’s performance since he began his term as president.

“Since my election, U.S. stock markets have soared 70%, adding more than $12 trillion to our nation’s wealth,” Trump said.

However, images of Democratic House Leader Nancy Pelosi ripping up pages of the president's speech as Republican lawmakers took to their feet to applaud Trump's address, underscored the country's bitter partisan divide and reminded investors there was little chance of policy progress of any kind between now and the end of the year.

Trump didn't mention his impeachment trial and his expected acquittal in the Senate this week during his speech.

3. -- Disney+ Subscribers Jump to Nearly 29 Million 

Walt Disney (DIS) - Get Report shares were rising 0.54% to $145.51 in premarket trading Wednesday after the entertainment and media giant posted fiscal first-quarter and sales that beat analysts'  estimates thanks to the outperformance of its direct-to-consumer video offering, Disney+.

Disney said paid subscribers to Disney+ have reached nearly 29 million.

“We recognize there’s a lot of interest in this new business and we wanted to give you some additional context. So I’m pleased to say that as of Monday, we were at 28.6 million paid subscribers,” CEO Robert Iger said in a conference call Tuesday.

Disney+ ended the quarter with 26.5 million subscribers, beating analysts' estimates of 20 to 25 million, and accumulated an additional 2 million so far in 2020 thanks to new sign-ups directly on Disney and through various distributors.

The company said it expects its next wave of subscribers to come from Western Europe and India, where Disney+ is set to debut in March. 

Iger said he was "comfortable" that Disney+ struck the right balance of library and original content.

"Clearly, the original shows that we decided to invest in, led by the 'Mandalorian,' have worked. And we knew when launched that we were launching with a modest amount of original programming and that it would build over time...[we] don't really feel that there's much that we have to adjust to right now," Iger said.

Meanwhile, Disney said it temporarily has closed its theme parks in Shanghai and Hong Kong due to the coronavirus, which could cost it nearly $175 million. 

4. -- Ford Slumps After Profit Miss

Ford (F) - Get Report shares were falling sharply in premarket trading Wednesday after the U.S. automaker missed fourth-quarter earnings expectations and offered a disappointing outlook for 2020.

The maker of popular F-150 pickup trucks, Ford reported adjusted earnings of 12 cents a share on revenue of $39.7 billion. Analysts had expected Ford to post earnings of 17 cents a share on sales of $39.6 billion.

Looking into 2020, Ford said it expects earnings of $5.6 billion to $6 billion, well shy of the Wall Street consensus of between $7.3 billion and $7.6 billion, and cautioned that it was too early to quantify the impact of the spreading coronavirus on its worldwide operations.

"My strong instinct is to want to tell you what the impact of this virus may be on our business and our guidance for this year. However, it's simply too early," CEO Jim Hackett told investors on a conference call.

The stock fell 8.28% to $8.42 in premarket trading.

5. -- Intercontinental Exchange Confirms It Approached eBay About a Takeover

Intercontinental Exchange (ICE) - Get Report confirmed late Tuesday it has approached eBay (EBAY) - Get Report to discuss a potential deal but that eBay "has not engaged in a meaningful way" and the companies weren't in discussions.

Shares of eBay jumped close to 9% on Tuesday following a report from The Wall Street Journal that said Intercontinental Exchange, the owner of the New York Stock Exchange , made a takeover offer that could value the online marketplace at more than $30 billion.

Intercontinental Exchange is primarily interested in owning eBay's core marketplace business, and not its classified unit, which eBay has been considering selling, the Journal said. The classified unit could go for around $10 billion in a sale.

EBay shares were down 0.88% to $37.08 in premarket trading.