Posted on 02/27/2020 2:20:29 PM PST by Red Badger
Stocks fell sharply in volatile trading Thursday as investors worried the coronavirus may be spreading in the U.S. A slew of corporate and analyst warnings on the virus dragged down the major averages, tipping them into correction territory.
The Dow Jones Industrial Average plummeted 1,190.95 points, or 4.4%, to close at 25,766.64. The S&P 500 slid 4.4% to 2,978.76 while the Nasdaq Composite dropped 4.6% to 8,566.48. The Dow had its worst day since February 2018 while the Nasdaq and S&P 500 posted its biggest one-day loss since August 2011.
It was also the Dow’s biggest one-day point decline in history, surpassing Monday’s 1,031-point drop. The S&P 500 also closed below 3,000 for the first time since last October.
“We’re extremely cautious in the short term,” said Tom Hainlin, global investment strategist at Ascent Private Capital Management. “No one really seems to be an expert on the coronavirus. We haven’t seen anything like this really in our investing lifetimes.”
Thursday’s losses put the Dow, S&P 500 and Nasdaq in correction territory, which is defined on Wall Street as down more than 10% from their a recent high. It took the Dow just 10 sessions to tumble from its all-time high into a correction. The S&P 500 and Nasdaq set record highs last week. The Dow now sits more than 12% below its all-time high.
The Dow and S&P 500 were also on pace for their worst weekly performance since 2008. Through Thursday’s close, the Dow was down more than 11% week to date while the S&P 500 had lost 10.8%.
The CDC confirmed on Wednesday evening the first U.S. coronavirus case of unknown origin in Northern California, indicating possible “community spread” of the disease. The patient had no travel history or contacts that would have put the person at risk, the CDC said. On Thursday, California Gov. Gavin Newsom said the state is monitoring 8,400 people for coronavirus.
Apple, Intel and Exxon Mobil were among the worst-performing Dow stocks Thursday, dropping at least 6% each. AMD and Nvidia fell 7.3% and 5.6%, respectively.
American Airlines dropped 7.7% while United Airlines slid 2.4%. Las Vegas Sands and MGM Resorts, meanwhile, fell 1.3% and 4.5%, respectively. Trump press conference
President Donald Trump tried to assuage concerns over the outbreak on Wednesday night. At a White House news conference, he said the risk of coronavirus to people in the U.S. is still “very low” but added that the U.S. is going to “spend whatever’s appropriate.” Trump also put Vice President Mike Pence in charge of the U.S. response to the coronavirus and said markets should soon recover.
But worries over how the coronavirus will impact corporate profits and global economic growth overwhelmed the president’s assurances. The stock market has been under pressure all week as the number of confirmed cases increased outside of China. South Korea has confirmed a total of more than 1,700 cases. More than 600 people have contracted the virus in Italy.
The outbreak has also led several companies to issue warnings about its earnings and revenues.
Microsoft said Wednesday it will not meet its revenue guidance for a key segment. It said its supply chain is “returning to normal operations at a slower pace than anticipated,” which led the tech giant to cut its forecast for its personal computing division. Personal computing accounted for 36% of Microsoft’s overall revenue during the previous quarter. Microsoft shares were down 7.1%. PayPal also issued a warning about its outlook. Goldman’s bearish call
“US companies will generate no earnings growth in 2020,” David Kostin, Goldman Sachs’ chief U.S. equity strategist, said in a note that further spooked the market on Thursday. “Our reduced profit forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for US exporters, disruption to the supply chain for many US firms, a slowdown in US economic activity, and elevated business uncertainty.”
The S&P 500 posted Thursday a six-day losing streak, its longest daily slide since August. The Dow also had a sixth consecutive loss, the 30-stock average’s longest losing streak since 2018.
“As this week’s selling has progressed, we have seen some evidence of increased caution on the part of investors,” said Willie Delwiche, investment strategist at Baird. “Investors are shifting away from excessive optimism but there is still little evidence of fear overwhelming complacency. Bottoms are typically processes punctuated by climactic events and seeing breadth indicators stabilize would be an encouraging sign that such a process is underway.”
Bond prices, in turn, have surged this week sending yields to historic lows.
The benchmark 10-year Treasury yield dipped below 1.25% on Thursday, hitting a record low. The 30-year bond rate is also trading at an all-time low. Yields move inversely to prices.
“We’ve hit a pocket of fear,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “This is a big deal. … If this flows into the U.S., we could be in trouble because, let’s face it, the U.S. consumer is what’s holding this thing together.”
Market’s been too hot last couple weeks. AMD went up $10 in a week, it needed a pullback. Better to get it over with fast, and it’ll be oversold when it rebounds.
Yep all those trillions in new printed money ($$$ & Euros, etc.) has to go somewhere, and with interest rates near zero in the US (negative rates in the EU) it was pouring into treasury bonds/bills and the stock market.
The P/E chart you mentioned:
https://www.multpl.com/shiller-pe
And then... Zoooooooooooooooooooooooooooooooooooom!
The Dow is now down 10.7 for the year, over two years it is now up just 1.7%. If the Dow goes down to 20,000 (I hope it holds at 25,000) it is all over for Trump, he will lose-make no mistake about it, and I’m a Trump supporter. It would take too long to come back.
Many people who are not into the stock market don’t get how it impacts them. If the Dow doesn’t snap back it impacts companies cash, investments, production, jobs 401ks, and starts a recession, just as it did in 2008. That is the way Dems can win and you can just about hear them rooting it on.
Hypocritical Pelosi and Schumer are playing politics with the Corona Virus and people are already panicking. Just try to find a common N95 mask. Amazon, Walmart, CVS, Target are all sold out. I was in an Ace Hardware store getting some weed killer and the guy said they just had a rush-a rush on masks, he got 200 boxes in and sold out in an half an hour won’t have more for weeks.
Pence needs to speak daily on Corona virus AND speak about the collaboration the administration is doing with Bio Tech firms to find anti-bodies (best approach IMHO ) with Regeneron,symbol Regn, this is the company that shut down ebola. If the market holds above 25,000 the recovery in markets typically takes about 4-5 months but Dems will try and make this worse by showing how Trump is minimizing it. He took too much of the Rush Limbaugh approach (hey regular flu kills too) and it did the opposite of what it intended as evidenced by market sell off and people panicking more.
Trump or Pence should speak more to specifics as to what he is doing (and they are) including banning flights, the big one is how HHS IS working with Regeneron, Regn on antibodies, with Vaxart Inc. (NASDAQ: VXRT on vaccine, new Sepsis Dr. Marik protocol to shut this virus down which unlike regular flu can mutate and has a much much higher death rate. If he wants bonus points he can talk about how these advances will help reduce regular flu deaths as opposed to being surprised to how how many die from flu. Gawd the deaths from flu will be bad enough but a President Sanders will be bad
He’s going to take the blame for Intractable Pain Patients being Forced Tapered which began with Chris Christi’s $800,000 book deal, he purposed the current CDC Director Redfield who was out for vengeance his 37 yr old musician son OD’d on Heroin or Cocaine depending who wrote the article laced with Fentanyl. Then the Greedy Addiction Shrink Andrew Kolodny WHO RAN SUBOXONE Phoenix HOUSES entire PROP committee lied about the stats, our vets were hit first the patients with citizens with rare, autoimmune and injuries that can’t be fixed. Many have been through 20+ surgeries. They are now dying of Heart Attacks, strokes, and suicide. https://legalnewsline.com/stories/512633199-j-j-s-lawyers-note-opioids-researcher-being-paid-hundreds-of-thousands-for-testimony-in-oklahoma-trial
IT’S ALL BEEN A CON JOB.
Generally agreed....but I think the virus was just one of a few things that could have “popped the bubble”. Market was pumped up w/QE/”easing”/low rates and the “pin” just happened to be a new virus.
The rats are dancing in the streets
Charmin has reached a new bottom
Hundreds already have been wiped out???
VERY old joke remembered (just barely) by a very old FReeper
Headline if Bernie wins- Dow plunges to -5000.
Time to buy.
JoMa
>>Tried to sell today in Canada but they closed the market the last hour of trading due to volumes.<<
Seriously? If that’s the case, the opening tomorrow should be interesting.
I hope you mean explode upward!
Daily Mail has a story every few hours blaming Trump.
1. Pence is anti-science, they say, and let AIDS spread reather than giving needles out in Indiana.
2. HHS ignored CDC and brought Americans back into the country and didn’t take proper precautions.
MSM has decided to push the panic and tank the markets. Dems figured out this is their only path to a win.
Hell the Futures Market can "Limit" out..and no trading goes forward that day....Just hope you are on the right side of that.......
The DemoRAT hysteria about the coronaNOTHINGBURGER has wiped away TRILLIONS from American accounts. THIS IS TREASON.
Here’s what should happen now:
— All Republican-controlled states should pledge their Electoral votes to Trump now. They could legally do that. They do not have to hold elections.
— Trump should arrest most (or all) House Democrats for treason, regaining control of that body.
— The arrested Democrats should face swift military tribunals.
— Once the House is secured and the traitors are punished, investigations into MANY, MANY things should begin.
I don't think the average person on here understands what sort of dumpster-fire the markets would be if it wasn't for the Fed constantly manipulating the system. If the market were just allowed to be the market since 2017 - we wouldn't be anywhere's close to 29K - or 25K.
If they are making those announcements to spook the markets now, then they are really stupid. All this correction does is get rid of the weak hands so when the market comes back it will be stronger than ever. As you pointed out in your first post we have tons of time for the market to come back before Trump takes credit in his summer campaign speeches.
Nope. The correction will just get rid of weak hands. The people who buy during this correction will hold through the summer manipulation and the October surprise. Those are far more dangerous for Trump than a correction now.
If the market is being manipulated through news stories now, it is far too soon. They needed to wait until late spring.
It's a correction, necessary for a healthy market.
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