Market Insights

Stocks keep rising as investors come to believe China’s coronavirus is starting to fade.

Here are three big things to know as buyers return to the market:

Coronavirus May Have Peaked

Beijing announced just 1,749 new cases of the disease today, the lowest total this month. The illness, technically known as Covid-19, has also remained mostly in Hubei Province. Both of those facts are making investors and officials believe strict control measures have worked.

Chinese factories are coming back to life a result. Earlier today, Reuters reported how manufacturing workers in cities like Foshan and Zhongshan are trickling back to their machines. Activity also rebounded at an important electronics market in Shenzhen.

These stories come as a relief after Apple (AAPL) warned its production and sales would miss targets in the first quarter. Hundreds of other technology companies — especially semiconductor firms — would also be at risk if the slowdown continues.

Bullish News Continues for Tech Stocks

Now that the Covid-19 may be receding into the rearview mirror, investors can return to other potentially bullish stories in the technology space. And they don’t have to look far.

Tesla (TSLA), for example, has gotten three bullish analyst calls in the last two days:

1. Yesterday, Morgan Stanley doubled its price target from $650 to $1,250. The analyst had to grudgingly admit it was too pessimistic about Elon Musk’s ability to ramp production at the electric car maker.
2. Today, Bernstein doubled its price target from $325 to $730. The analyst, also bearish, conceded that few negatives seemed to threaten the stock at present.
3. Piper Sandler raised its target from $729 to $928. The note saw potential for TSLA’s non-auto business like solar and batteries.

Speaking of solar, Enphase Technologies (ENPH) spiked more than 30 percent after crushing estimates and raising guidance. The maker of panel-management systems for homes is up more than 1,000 percent since the beginning of last year.

Two major semiconductor stocks, Advanced Micro Devices (AMD) and Nvidia (NVDA) also extended their runs to new highs. AMD won a contract to provide Epyc chips for Alphabet’s (GOOGL) Google Cloud. NVDA jumped following a Bernstein upgrade.

Coronavirus Hasn’t Hurt the U.S. Economy

Finally, there’s little evidence of Covid-19 hurting the U.S. economy. If anything, it might have a slightly positive effect by keeping interest rates low.

Just look at January’s housing data. Starts on new homes and permits to build beat estimates as the market continues to recover before the spring buying season.

Manufacturing data from the New York Federal Reserve also rose more than expected yesterday. And today producer price data showed a big gain for services like hotels and healthcare. That’s potentially positive for wages — unlike a spike in gasoline prices.

In conclusion, investors should never forget the adage that “bull markets climb walls of worry.” Since the S&P 500 broke out in October, it overcame recession worries and Iran worries. Now it’s trying to do the same thing with coronavirus.