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US Stock Market: Encouraging WHO Comments Help Averages Recover from Facebook Weakness

James Hyerczyk

The major U.S. stock indexes posted a two-sided trade on Thursday, first working lower early then mounting a dramatic rally into the close. Early in the session, stocks were down across the board in response to poor quarterly results from Facebook and lingering concerns over the spreading coronavirus.

Stocks started to pare losses during the last hour of trading after the World Health Organization (WHO) declared a global health emergency, but made comments that seemed to soften the potentially bearish news. The futures market soared after the close after Amazon reported a huge earnings beat.

In the cash market, the benchmark S&P 500 Index settled at 3283.66, up 10.26 or +0.31%. The blue chip Dow Jones Industrial Average finished at 28859.44, up 124.99 or +0.43% and the technology-based NASDAQ Composite closed at 9298.93, up 23.77 or +0.26%.

In the futures market, March E-mini S&P 500 Index futures settled at 3289.75, up 17.25 or +0.52%. March E-mini Dow Jones Industrial Average futures finished at 28791, up 81 or +0.28% and March E-mini NASDAQ-100 Index futures closed at 9216.25, up 117.75 or +1.28%.

Facebook Crushed by Slow Growth, High Expenses

Shares of Facebook, Inc. fell 7% on Thursday after the social media giant posted its slowest growth since its market debut as expenses mount and warned of continued stagnant growth, Reuters reported.

The dire forecast prompted six Wall Street analysts to cut their price targets with Pivotal Research reducing its own target by $30 to $215.

Pivotal analyst Michael Levine, who downgraded the stock to “hold”, said he expected cautious commentary around the first quarter of 2020 and a better result for the fourth quarter.

Facebook Chief Financial Officer David Wehner said that the pace of expansion will slow further in the first quarter of 2020.

Intraday Rally Gains Traction after WHO Declares Coronavirus Global Health Emergency

Equities were down most of the session on Thursday as investors continued to monitor the potential impact of the deadly coronavirus, but began to reverse course near the close after the World Health Organization (WHO) declared the outbreak a global health emergency.

The major stock market averages recovered into the close after the WHO announcement as investors seemed to be relieved that the health experts felt Chinese authorities had the situation under control. Furthermore, the WHO did not recommend restricting travel to China.

Amazon Beat Sends Futures Markets Soaring

Shortly after the cash market close, stock market futures soared after, Inc. reported earnings that beat analysts’ estimates for fourth-quarter revenue, as its efforts to speed up delivery helped attract more shoppers during the holiday season.

Net sales rose 21% to $87.44 billion in the fourth quarter ended December 31, beating estimates of $86.02 billion, according to IBES data from Refintiv.

Shares were up 13% in after-hours trade, putting the online retailer back in the $1 trillion market capitalization club.

Amazon also forecast operating income of up to $4.2 billion in the current quarter, down from $4.4 billion the year prior.

Jeff Bezos, Amazon’s chief executive, said in a statement that the world’s biggest online retailer now has more than 150 million paid members in its loyalty club Prime, a 50% increase from its last disclosure in April 2018.

This article was originally posted on FX Empire