S&P 500, Nasdaq turn positive amid mixed coronavirus news

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By Stephen Culp

Feb 13 (Reuters) The S&P 500 reversed its losses on Thursday as investors weighed mixed news on the coronavirus and a spate of corporate earnings.

While a drop in Cisco Systems Inc CSCO.O shares helped keep the blue-chip Dow .DJIin the red, the S&P 500 .SPX and the Nasdaq .IXICrebounded and were both on track to eke out their fourth consecutive record closing highs.

Hopes that the coronavirus epidemic could be on the wane were soured by a spike in fatalities, with an additional 242 bringing China’s coronavirus death toll to 1,367.

The news caused a broad sell-off in global markets in a crisis that has resulted in quarantines, supply line disruptions and factory closings.

Still, there were glimmers of optimism as the director of the World Health Organization (WHO) told a news briefing that “we are not seeing dramatic increases in cases outside China.”

“(Investors are) looking at cross-currents and trying to figure out which is more important,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “The fact that the Fed is willing to stay the course offsets the coronavirus issue.”

Indeed, in his economic report to Congress earlier this week, U.S. Federal Reserve Chair Jerome Powell said the central bank was assessing the risk of the coronavirus and other potential threats, indicating any change to its accommodative policy was unlikely this year.

The Dow Jones Industrial Average .DJI fell 54.33 points, or 0.18%, to 29,497.09, the S&P 500 .SPX gained 2.89 points, or 0.09%, to 3,382.34 and the Nasdaq Composite .IXIC added 14.34 points, or 0.15%, to 9,740.30.

Of the 11 major sectors in the S&P 500, seven were trading in the black, led by defensive utilities .SPLRCU and consumer staples .SPLRCS.

Energy .SPNY stocks suffered the largest percentage loss.

The fourth-quarter reporting season is nearing its final approach, with 378 companies in the S&P 500 having posted results. Of those, 71.2% have surprised consensus estimates to the upside, according to Refinitiv data.

Analysts now see aggregate fourth-quarter earnings increasing at a 2.5% annual rate, a stark reversal from the 0.3% decline seen at the beginning of the year.

Cisco Systems dropped 5.0% after providing lackluster forward revenue and profit guidance on its quarterly earnings call.

Tesla Inc TSLA.O rose 5.6% following its announcement that it intends to raise $2 billion in a stock offering.

Alibaba Group BABA.N warned that the coronavirus sweeping China would hurt its revenues. The e-commerce company’s shares were down 1.2%.

American International Group Inc AIG.N fell 4.1% despite reporting better-than-expected quarterly profit on stronger underwriting in its general insurance unit.

Shares of Kraft Heinz Co KHC.O plunged 7.7% after the packaged food company missed quarterly sales expectations and took a $666 million charge.

NetApp Inc NTAP.O fell about 10.4% following the data storage equipment maker’s current-quarter profit forecast miss.

Advancing issues outnumbered declining ones on the NYSE by a 1.03-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers.

The S&P 500 posted 59 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 132 new highs and 51 new lows.

(Reporting by Stephen Culp; Editing by Dan Grebler)

((stephen.culp@thomsonreuters.com; 646-223-6076;))

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