The Dow Jones Industrial Average was up 0.26% at 1:25 p.m. EST Thursday, extending a multi-day rally. The coronavirus outbreak in China continues to rage, but news that China plans to reduce tariffs on some U.S. goods on Feb. 14 could be giving the market a boost.
Helping drive the Dow higher were Boeing (NYSE:BA) and Apple (NASDAQ:AAPL). Boeing stock staged a strong rally despite new software issues with the 737 Max, and Apple stock rose even as supplies of its popular AirPods are reportedly being threatened by the outbreak in China.
Boeing rises despite new 737 Max problem
Shares of beleaguered airplane and defense company Boeing were up 3.6% Thursday afternoon. There was no good news driving the stock higher, but there was some bad news related to the grounded 737 Max.
Bloomberg reported on Thursday that Boeing has discovered a new software problem with the 737 Max. At issue is an indicator light related to the stabilizer trim system that was turning on when it wasn't supposed to, a side effect of changes made to how the plane's flight control computers handle data.
Boeing said that the new software flaw wasn't expected to further delay the timeline for returning the 737 Max to service. The goal is to get the plane flying again by mid-2020. In November, Boeing said it expected a return to service in January. That prediction was far too optimistic.
Boeing's financial performance has suffered greatly due to the grounding of the 737 Max. Revenue plunged 24% in 2019, and the company reported an adjusted net loss of more than $3 billion. Commercial airplane deliveries plummeted 53% to just 380.
If Boeing does manage to get the 737 Max flying on schedule, questions remain about the willingness of flyers to board the scandal-ridden plane, and about whether airlines will be eager to place orders for a plane that has been buried in negative headlines.
Boeing's rally on Thursday offered some relief to investors, but the stock is still down nearly 17% over the past year.
Apple's AirPods could take hit from outbreak
While the iPhone is by far Apple's most important product, AirPods have been a fast-growing success for the tech giant. Apple reportedly ramped up production late last year to keep up with the insatiable demand for the pricey wireless earbuds.
The AirPods growth story could come under pressure due to the coronavirus outbreak in China. According to Nikkei Asian Review, Apple's plan to increase production of AirPods is running up against the reality of a major viral outbreak. Some of Apple's major Chinese suppliers have been forced to halt production as the virus spread, and even with work expected to resume next week, component shortages could slow production.
Another problem is the possibility of labor shortages caused by travel restrictions in some towns in China. Compounded by component shortages, production levels may take quite some time to fully ramp up.
On Monday, an analyst at TF International Securities warned that supply shortages of iPhones due to the outbreak could reduce Apple's iPhone shipments in the first calendar quarter by 10%. It now looks like the iPhone isn't the only Apple product that could be impacted.
Shares of Apple were up 0.8% Thursday afternoon, shaking off any concerns about supply constraints.