Disney Impresses, Oil Falls and Stocks Return to Record Territory
February 07 2020 - 7:29AM
Dow Jones News
By Paul Vigna
After two straight weeks of losses, major U.S. stock indexes
rebounded this week. The Dow Jones Industrial Average, S&P 500
and Nasdaq Composite all set new highs.
Traders were encouraged by news that China will begin cutting
tariffs, a welcome sign that "phase one" of the U.S.-China trade
deal is being implemented. And while the coronavirus is still
spreading, and still deadly, equities markets were more focused on
earnings.
Who were this week's winners and losers in the market?
WINNER: Walt Disney
The House of Mouse posted quarterly earnings Tuesday, and the
report included details on its new streaming service, Disney+.
After launching with about 10 million subscribers in November, Walt
Disney Co. reported the service now has 28.6 million paying
subscribers. The Street was expecting only about 20 million.
In the wake of the report, a number of analysts raised their
price targets; investors were less impressed. The stock has fallen
1.4% since the report.
The platform wars are the next major battleground for Hollywood
as technology alters the distribution model. Besides Netflix Inc.,
Hulu and Amazon.com Inc.'s Prime, Disney is competing against Apple
Inc. (Apple TV+), Comcast Corp. (Peacock), AT&T Inc. (HBO Max)
and ViacomCBS Inc. (CBS All Access). That is a heavyweight
donnybrook.
Having the right mix of programming and technology is going to
be key. It also doesn't hurt to have Baby Yoda on your team.
LOSER: Oil
Commodity markets have been hit harder than equity markets by
fears over the coronavirus. China is the world's biggest importer
of oil and copper, and many analysts expect a slowdown in its
economy because of business disruptions resulting from widespread
quarantines. Oil prices, in particular, have borne the brunt of
those fears. On Monday, oil prices slid into bear-market territory,
down more than 20% from their January highs.
The main U.S. benchmark, West Texas Intermediate, briefly traded
under $50 a barrel on Monday for the first time in more than a
year. It wasn't far off that price Thursday, closing at $50.95.
THE WEEK AHEAD: The economic calendar is light. Inflation ended
2019 on a benign note, and on Thursday the consumer-price index
will provide the first look at inflation in 2020. On Friday, the
retail sales report for January is released. Retail sales ended
2019 on a solid, if unspectacular, footing. The January report is
expected to continue that trend.
On the earnings front, there is another heavy week of reports.
Highlights include Cisco Systems Inc. (Wednesday) as well as
PepsiCo Inc. and Kraft Heinz Co. (Thursday).
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Write to Paul Vigna at paul.vigna@wsj.com
(END) Dow Jones Newswires
February 07, 2020 08:14 ET (13:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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