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Dow Jones News: Apple Rebounds; McDonald's Faces New Breakfast Competition

By Timothy Green - Mar 2, 2020 at 12:10PM

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Apple stock was upgraded, undoing some of the damage done last week, and McDonald's is ready to do battle with Wendy's in another iteration of the breakfast wars.

Morning trading was volatile for the Dow Jones Industrial Average (^DJI 2.68%) on Monday. Some wild fluctuations left the index up 1.8% at 11:10 a.m. EST, but more ups and downs are likely throughout the rest of the day. The novel coronavirus that originated in China has begun spreading in the U.S., with 89 cases and 2 deaths so far. Both numbers have the potential to rise dramatically before the outbreak is over.

Shares of Apple (AAPL 2.45%) rebounded on Monday after a brutal week. The tech stock was helped along by an analyst upgrade and an optimistic price target. McDonald's (MCD 1.77%) stock also rose, even as competitor Wendy's (WEN 4.76%) rolled out a new breakfast menu.

An analyst sees Apple rising 20%

Shares of Apple weren't spared during the coronavirus-related market sell-off last week. The stock tumbled about 12.7% in just five trading sessions, wiping out more than $150 billion in value. Shares were up 5.6% Monday morning, regaining some of that lost ground.

The iPhone 11.

The iPhone 11. Image source: Apple.

Over the weekend, CEO Tim Cook told Fox Business that he believes the supply chain disruption caused by the virus outbreak is temporary. Last month, Apple was forced to withdraw its guidance for the fiscal second quarter just a few weeks after issuing it. A combination of weak demand in China and a slow return to full production for the company's suppliers will hurt sales for at least a quarter.

Analysts at Oppenheimer see the slump as a buying opportunity and upgraded the stock to outperform on Monday, saying that any temporary shifts in iPhone shipments between product cycles would have an immaterial impact on the stock. Oppenheimer set a $320 price target.

Apple is reportedly planning to launch a low-cost iPhone in the coming months, but the supply chain disruption could derail those plans. The annual iPhone launch in the fall could also be affected if factories in China continue to have issues getting back up to speed.

In the long run, Apple will emerge from this crisis as dominant as ever, and consumers will continue to flock to its devices. But 2020 is shaping up to be a rough year for the tech giant.

McDonald's faces new breakfast competition

Fast-food giant McDonald's has faced down many challengers looking to steal away market share in the crucial morning daypart. Rival Wendy's has tried and failed before, unable to persuade customers to give up their Egg McMuffins. On Monday, Wendy's officially began another attempt to take on McDonald's, launching its new breakfast menu nationwide.

This time around, Wendy's is trying to differentiate itself with unique items. The Breakfast Baconator, a sausage-based version of the bacon-heavy burger, makes an appearance. On the beverage side, Wendy's has mixed together coffee and its Frosty dessert for the Frosty-ccino.

Wendy's plans to spend big to get the word out. The company will spend between $70 million and $80 million on breakfast advertising this year, including $40 million to $50 million of its own money. The rest will come from funds already contributed by franchisees.

McDonald's is taking this threat seriously. The company is giving away free Egg McMuffins to users of its mobile app on the same day that Wendy's is launching its breakfast menu. That move should knock some wind out of Wendy's sails.

Wendy's may have a better shot at making breakfast work this time, given its unique menu items and heavy advertising spending. McDonald's stock is shaking off the news, up 1.5% in the morning.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$141.66 (2.45%) $3.39
McDonald's Corporation Stock Quote
McDonald's Corporation
$247.90 (1.77%) $4.32
The Wendy's Company Stock Quote
The Wendy's Company
$19.13 (4.76%) $0.87
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$31,500.68 (2.68%) $823.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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