By Yasin Ebrahim
Investing.com – Wall Street rose Monday, but was off earlier highs on rising fears that the coronavirus is now likely to become a pandemic as more cases of the disease were identified over the weekend.
The S&P 500 rose 0.91%, while the Nasdaq Composite gained 1.48% and the Dow Jones Industrial Average gained 0.70%.
The number of cases of the virus rose to 17,200, with the first death reported outside China in the Philippines prompting experts to warn of an impending pandemic as China battles to contain the virus.
With fears that the virus will take an economic toll on China's economy, leading to a slowdown in the global economy, the People's Bank of China said it would inject a stimulus of $21.7 billion to ease the impact.
"Roughly two-thirds of the Chinese economy closed or impacted, and economists anticipate the coronavirus will have a deeper and more lasting impact than the SARS epidemic which subtracted an estimated 0.8%-1.0% from annual Chinese GDP growth," Stifel said.
The bullish start to the week for stocks was led by a sharp upswing in consumer discretionaries thanks to strong gains for sector stalwarts like Nike (NYSE:NKE) and Ulta Beauty (NASDAQ:ULTA).
Nike (NYSE:NKE) rose about 4% after UBS upgraded its rating on the company to buy from neutral and its price target to $136 from $103. The athletic footwear and apparel maker’s product innovation investments and e-commerce business are expected to boost growth, UBS said.
In addition, J.P Morgan added the stock to its Analyst Focus List.
Goldman Sachs upgraded Ulta Beauty (NASDAQ:ULTA) to buy from neutral and raised its price target on the stock to $307 from $285, citing a favorable valuation at current levels. There is little chance that of Ulta's operating margins "unraveling" in the event that its sales growth slows further, the investment bank said.
Investor sentiment on risk was also supported by a rebound in manufacturing in January.
ISM manufacturing data for January showed an uptick to 50.9, beating expectations of 48.5.
Energy lagged the move broader move higher, weighed down by a fall in oil prices as investor worries about slowing oil demand amid a drop in air travel continued.
In other news, Tesla (NASDAQ:TSLA) continued to advance, surging 15% after Argus boosted its price target on the stock to $808 from $556, on expectations for continued growth following the electric-vehicle's better-than-expected quarterly results reported last week.