Dow sinks, virus pushes it to sharpest quarterly plunge in over three decades

With Q1 ending with the Dow’s biggest decline since 1987 and S&P its worst since 2008 and with the mounting evidence of massive economic disruption from the pandemic, the Dow fell 410 points.  And with 13.1 billion shares traded, some say this is just fence-sitting, with the real decisions being made later this week when jobless and payroll data comes out.  Since it’s a foregone conclusion that these reports will not be positive, we’re likely to see more selling then.  They said last week that this week would be grim.  And we’ve only just begun. 

Wall Street rallies, led by healthcare jump

There are certain stocks that are benefiting from this crisis, particularly healthcare, and it was the resurgence in that sector that caused the Dow to jump nearly 700 points today, particularly on the news from J&J about winning government funding to develop a vaccine.  Last week the Dow had its biggest weekly gain since 1938 but the three major indexes are still more than 20% down from their highs.  Still, this is a considerable improvement on the 30% down from the week before.  But investors brace for upcoming data that is likely to confirm the damage to the economy.  Over the weekend, JP Morgan put out dire forecast numbers:  GDP down 10% in Q1, 25% in Q2.  Volume was down to 12.2 billion which may be indicating that the panic is slowing a bit.  Or investors are on the sidelines looking for an entry point. 

Succinct Summations for the Week 3.27.20 (plus Returns From the Bottoms of Bear Markets)

Below is the weekly Sunday night summation, the main positive being the $2T stimulus and, until shortly before close on Friday, a market rally.  The big negatives are that we now lead the world in COVID-19 infections, we have a massive shortage of medical gear, and jobless claims went from under 300,000 to over 3 million in one week.  The bonus this Sunday night is a very telling chart detailing every single market downturn since 1929, how bad each one was and how long it took to recover.  Quite revealing.  Everyone please stay well. 

Some Thoughts On Winning Trades

We're at the end of a very terrible week with the infection rate over 120,000 and the death toll over 2,000 so I thought I'd provide a diversion this weekend and instead provide some positive talk about trading.  In view of this I provide the graphic below which I found this week on TradeWiki.  At first, the numbers appear grim.  80% of all traders quit after two years, half of those after only one month, 93% after five years.  Only 1.8% of all traders are profitable.  But reading between the lines, I see a very positive message.  If 98% of traders lose money, if 88% of all trades are losers, that means that the AVERAGES are heavily skewed toward the losers. 

Stocks down on virus' economic toll; dollar falls further

With the stimulus bill passed, the market focused more sharply today on the disease itself and with U.S. confirmed cases now surpassing 100,000 and deaths exceeding 1500, the Dow dropped over 900 points and much of this in just the last half hour as the updated death count came in.  The dollar also fell but this was seen as a positive meaning that central bankers were being successful in easing monetary stress.  Of course, as much as the markets wanted the stimulus, it’s clear that stimulus alone is not enough but only when the uncertainty of this pandemic is relieved will the markets improve, quite a change from a few days ago when the experts all said investors were more interested in the reaction than in the disease.  First the curve must flatten, then there’ll be the question of how long to return to normalcy thereafter.  And when we do return to normalcy, does the curve go parabolic again?  These are the questions that haunt.  This was a bad week for the world and the country but the market improved because of the stimulus.  Next week, with no stimulus and only the pandemic, what will happen?  The keys are: where is the peak, how long for the lockdown, and will China suffer a second wave?  Volume was 13.4 billion. 

Dow wraps up strongest three days since 1931

Today marked the three strongest days since 1931 with the Dow zooming up over 1300 points, again over widely accepted speculation that a stimulus bill is coming shortly.  The Dow is now 21% up from the Monday low, the S&P down 22% from its February high, all considerable improvements over a week ago and considered by some experts to be indicative of a possible bottoming process.  Also kicking the indexes up was the claims last week for unemployment benefits coming in at just under 3.3 million where the forecast was 4 million.  The VIX also dropped almost 3 points which also could be indicative of a bottoming process.  Volume was 15 billion. 

S&P 500 rallies for second day as investors await $2 trillion aid package

Wow, the Dow was up almost 1500 points as late as 3:30, all on expectations that the stimulus would pass today.  Then in the final minutes, the bill ran into yet another snag and it dove a grand closing up 495.  After senior senators of both parties said an agreement had been reached, there were last minute challenges, particularly from Bernie Sanders, over language in the bill regarding jobless benefits.  The next thing we knew top Republicans were calling for a minimum of another 24 hours to further study the bill.  Still, it is widely expected to pass and thus provide the markets with assurances that “the world is not falling apart.”  Data due on Thursday is expected to confirm that the jobless rate has reached one million.  The S&P remains down 27% from its high but that’s a lot better than the 34% on Monday.  Volume remains extreme at 16.9 billion. 

Dow soars over 11% in strongest one-day performance since 1933

There’s been nothing but dire headlines lately, first saying the worst downturn since 2008, then since 1987, then WWII.  But today that changed with a huge blast of buying that produced the biggest one-day rally since 1933 with the Dow gaining 11% and over 2100 points.  All of this was due not to the Congress finally coming through on the stimulus but only on the hopes that it was coming soon.  But as today’s expert noted that the real buying won’t begin until we see “a peaking of the cases, and when it starts to come down, I think that’s when everything gets lit up.”  So a quick recovery is expected, but only after we see a significant decrease in new cases.  However, as was stated yesterday, the market is really much more interested right now in the response to the virus rather than the virus itself.  Today it got a good push in that direction, especially since we don’t know when the peak is coming.  Volume was 15.3 billion. 

Historic Fed boost fails to stop Wall Street's virus-driven sell-off

Despite the Fed taking unprecedented action to stop this historic sell off, the Dow was still down further again 582 points at close, though earlier it was down almost a thousand again so we’ll take any good news we can get.  Though the general consensus is that the Fed’s action is very necessary and will help a great deal to help the recovery once this crisis is over, what is really needed right now is the Congress to pass the stimulus package, which was expected today but did not happen, and thus the sell off.  As today’s expert says, “What we really need to turn things around is a sense of closure – not on the virus, but on the response to the virus.”  

Succinct Summation of Week’s Events 3.20.20 (plus things to do in self-quarantine)

Below is the usual weekly summation, the main positive being the huge stimulus package on the books for next week, the big negative that we are almost certainly in recession (though technically a recession has to be a GDP contraction for two consecutive quarters and we're not even close to that yet) and the unemployment rate in the last two weeks has likely already reached 20%, which hopefully will be a very temporary situation but only time will tell.  I mean it's not like the demand for those jobs has disappeared.  Another negative that really should be a positive is jobless claims rising 70K.  With so many businesses shutting down this past week, I'm shocked the number is so low.  (And it can't be right. It was on the evening news that 108K applied this week in Michigan alone!) Look for a much bigger number next week.

Coronavirus Will Change the World Permanently. Here’s How.

"Shelter in place" is a term that none of us had even heard of a month ago.  Now's it's part of our lexicon, and may remain that way for some time.  (Remember it was just barely over a month ago that the stock market was at its all-time high with no end in sight, everything was rosy, and the biggest concern on all our minds was who the Democrat nominee might be.)  So as we all "shelter in place," this morning Barry Ritholtz posted this article from Politico on his Weekend Reading list on The Big Picture blog.  They brought together 30 brainiacs from all areas of society to tap their meters on where we're heading.  The big surprise is that their prognostications on how coronavirus is going to change our world are mostly quite positive.  Since there are 30 brief interviews here, it's quite lengthy so I have included only the intro paragraphs below.  But the link will take you to the full article.  Enjoy the sunny if chilly weekend.  Stay safe, stay well, and stay "in place." 

Wall Street dives most in a week since 2008 as NY, California impose restrictions

The Dow rose almost 450 points in the morning on news that global policy makers were turning on the fiscal taps. But then when news filtered in about the worsening crisis in California and New York both issuing unprecedented state-wide “stay at home” orders, panic selling again ensued dropping the index almost 1500 points to close down just over 900.  These moves by the two most populous states affect some 40 million people with more than 12,000 confirmed cases of infection nationwide today.  Everything is in limbo as the markets “are still trying to get a handle on how bad the economy is going to be” and news of entire states closing up affects “a lot of economic activity and a lot of businesses.”  Investors now are looking towards a fiscal stimulus plan for salvation.  The good news is that the VIX dropped to nearly 66 today, quite a change from nearly 83 on Monday, which is taken as a sign that investors may be seeing a bottom.  Volume was over 18 billion but this was due to quadruple witching so it can’t be trusted, except it may mean selling has slowed a bit.  Wait until Monday to get a better indicator. 

Wall Street ends higher to stem coronavirus selloff

Once again the Dow took nearly a 900 point dive right out the gate but thankfully recovered the entire loss and even closed nearly 200 points up.  The trigger was the world’s central banks taking more urgent measures to stabilize the financial markets with the deepening economic damage from the virus.  The ECB pledged 750 billion euros in sovereign debt and the Fed opened swap lines with banks in nine new countries, all seen as essential measures for maintaining critical liquidity.  Analysts now see an 80% chance of recession this year and today the S&P is 29% down from its February high.  As today’s expert said, “Active investors are using this opportunity to maybe pick up what might be perceived as bargains because nobody’s really sure how to value stocks right now.”  Volume remains extreme at just over 17 billion. 

Wall Street extends recent selloff, Dow all but erases 'Trump-bump'

As of today, the Trump Bump has been declared over as with the over 1300 point drop on the Dow, virtually all of the market gains since the 2017 inauguration have been wiped out.  The index was really down almost 2300 points as late as 2 pm when the Senate passed a bill to provide aid for the outbreak and that boosted things late in session, which perhaps will continue tomorrow.  But that may be countered by anxiety from the exchanges closing to live trading and going strictly electronic come Monday.  The consensus remains that until there is evidence of containment of the virus, this will just keep getting worse.  The S&P is now down 29% from its record high last month  and JP Morgan offered a dire forecast for a shrinking GDP. The VIX is at 76.4, but that’s better than the 82.7 from Monday.  Volume remains extreme at 18.5 billion. 

Wall Street bounces after Monday's historic sell-off

After yesterday’s historic rout, the worst one-day point drop in history, the Dow came back over a thousand points today with the Fed announcing a return to the QE strategy used during the Great Recession, pumping confidence that companies would have sufficient funds to pay workers and buy supplies. Trump is also pursuing an $850 billion stimulus package to allay liquidity concerns.  Still, the market has only recouped part of its losses, the S&P still down over 25% from its record Feb 19^th close.  And more volatility is almost certainly ahead with defensive sectors getting most of the benefit.  Volume remains extremely high, today at nearly 17 billion. 

Wall Street deepens historic slump as virus response comes up short

Today’s the day investors lost faith in the ability of the government and banks to control this pandemic.  Thus began a wave of panic selling at the outset that immediately triggered the fail safes and shut the exchanges down temporarily.  But the selling continued in earnest afterwards with the Dow suffering its biggest drop since 1987’s Black Monday.  The slide continued in late session with Trump’s press conference urging more social restrictions and warning of a likely pending recession.  By close the index had dropped nearly 3,000 points and the “fear gauge” ending at over 82, its highest ever closing level.  As today’s expert noted, the market is in “full panic mode.”  Volume was again extreme at nearly 16.4 billion shares traded. 

Succinct Summation of Week’s Events 3.13.20 (plus COVID-19 Impact on 2020 Presidential Election)

Below please find the usual weekly summation, the main positive being thanks to Friday's late great rally the losses for the week were under 9%, else it might have been much worse.  And the negatives are painfully obvious, that is the historic disruption to our society from COVID-19, much of which has worsened over the weekend since this summary was published, and this will undoubtedly be reflected in tomorrow's market so let's not celebrate Friday's rally too quickly. 

Sorry, We’re Closed

We have now entered a period of history unprecedented in our lifetime, an entire society (really an entire world!) shut down in order to fight a modern plague and hopefully stave off a global recession or, worse, another Great Depression.  Historians are already saying that, when this over, it will be written about for many years to come as one of the greatest health crises in history.  Today Barry Ritholtz published a very telling essay on this topic which I present below.  It's also one of the best summaries of this crisis that I've seen and offers both prognostications and suggestions.  Enjoy the sunny Sunday.

Stocks stage furious rally late after national emergency declared

Wednesday we lost nearly 1500, yesterday nearly 2400, and today we were up about 550 points until about 3:30.  Then just before the closing bell, Trump made the announcement of declaring a national emergency and freeing up $80 billion of federal funds to deal with the crisis.  This was enough to trigger a wild buying spree in the final minutes of the session to shoot the Dow up another 1500 points for a total gain at close of nearly 2,000 points, recovering most of yesterday’s historic losses.  That still put the indexes about 20% below their highs (which admittedly is better than 25%) and a loss of 8% for the week but, considering the terrible pounding of the past several days, it was a little good luck charm for ending a Friday the 13^th.  An aid package was expected to pass the House, one that Trump supports.  Extreme volatility is expected to continue in earnest but, at least for once, the markets had a good day.  Volume was again extreme at 17.1 billion. 

Plunging Wall Street stocks end record bull run

It was another horrible day, called the biggest one-day percentage drop since 1987’s infamous Black Monday, triggered by last night’s Trump speech regarding the Europe travel ban.  The message everyone is receiving is, “the market is telling us whatever’s been done so far hasn’t been enough.”  The S&P and Nasdaq are both now down more than 25% below their record highs from last month.  But there is a difference between now and Black Monday. The 1987 event was a one-day crash and, though it took some months to recover, the market never really went lower.  In our case, this has been one of several recent crashes, and there is nothing but uncertainty as to when it might bottom out.  The only good news is that, historically, whenever the market sinks this much this quickly and for no good reason other than fear, it just rebounds pretty quickly too.  But we’re not seeing a lot of optimism out there until there are substantial signs that this global health crisis is getting under control.  China and South Korea are now coming out of it after peaking just one month ago. Let’s hope that next month looks brighter here.  But for now, it’s just sheer panic, with today’s tremendous volume of 18.5 billion shares which, if that’s not a record, it’s got to be pretty close. 

Wall Street tumbles, Dow confirms bear market

With another dramatic sell off in today’s session sinking the Dow another almost 1500 points, all the media is reporting that we are back in bear market territory with a 20% loss from the February 19^th high.  Yet, this article says it’s really 19%.  Still, for want  of a hundred points, it would be there.  The big trigger today was the WHO for the first time finally putting the label of “pandemic” on this crisis.  Wall Street was further upset by a report that the White House would not be releasing what it knows about this virus, but rather treating it as classified info.  All of this added further uncertainty with the very uncomfortable sentiment being, “help may be slow in coming.”  It will be interesting to see in the morning whether Trump’s address tonight placates the market.  Unfortunately, the financial news is already out that S&P futures have been doing a big sell off since the speech.  Volume remains extremely high at 15.1 billion. 

Wall Street bounces back as stimulus hopes soothe recession fears

With investors on a bargain hunting spree, and with new hopes of an unprecedented second rate cut in the same month, the market sprang back into action today boosting the Dow nearly 1200 points, making up more than half of yesterday’s historic losses, and taking the three indexes out of the bear market territory they momentarily occupied yesterday.  Recovering nearly 5% on the day, the market in a single day is now just 15% below the record highs of February 19^th.  Russia also got the message with the strong reaction against their weekend oil move and have noted a willingness to resume talks with OPEC, thus sending crude on a 10% rebound too.  Volume was again furiously above average with 15.8 billion shares traded. 

Wall Street clobbered as crude plummets, virus crisis deepens

It was one of the most dramatic routs in recent memory and it was the largest single day point drop on the Dow in the history of the Dow.  2,013 points straight down and this time it wasn’t because of coronavirus.  Nope, this was an energy problem with Russia and Saudi Arabia and their oil supply pact collapsing, thus spurring both major oil producing nations to dramatically increase production and thus trigger an oil price war and thus triggering the biggest one-day drop in oil prices since the Gulf War in 1991.  Since a big drop in oil prices is generally a precursor to recession, and with the market already very much on edge due to coronavirus, the sell off with an astounding 17.2 billion shares changing hands was so sharp that it triggered the fail-safes put in place after 1987’s Black Monday and halted trading for part of the morning.  Treasury yields have sunk to a record low and the S&P is now 20% below its February 19^th high, suggesting the end of the bull market.  The irony is that today happened to be the 11^th anniversary of the bull market.  Happy Birthday, Wall Street!   Better luck tomorrow? 

Succinct Summation of Week’s Events 3.6.20 (plus Markets And Investing At Business Insider)

It is once again time for the weekly summation and, once again, though the mainstream news is mostly gloom and doom about coronavirus, the financial media is upbeat about the sudden rise of Joe Biden (or to be more specific the sudden fall of Bernie Sanders), enough so that though the markets took another beating this week, all the indexes still ended the week on the plus side after last week's historic fall.  The fundamentals remain strong with payrolls and sales rising and jobless claims falling.  The big negative: the bond markets have fallen to record lows, which historically points to bad things coming.

CHINA CORONAVIRUS AFTERMATH -- PBS WealthTrack

Not to beat this coronavirus thing to death (To death?  Really?  As if it's drawing to a close? No, this is going to be with us for a while), but I felt I would be remiss if I did not take this opportunity to bring you the latest and greatest about the crisis from PBS's WealthTrack program Thursday night.  There is so much gloom and doom out there, even though the flu is so much more contagious and so much more deadly.  It's really the disruption of global supply chains and the threat that poses to triggering shortages of basic materials and a global recession that has everyone, at least in the financial world, so much on edge.  I suspect that a month from now we'll have much more clarity on this situation; it will by then be either a full scale pandemic or be considered under control and, if hopefully the latter, things will then go back to normal.  I hope this WealthTrack program will provide some more clarity and relieve some concerns.  Enjoy the remainder of this very pleasant and sunny weekend.

Coronavirus concerns drag down Wall Street, but indexes eke out weekly gains

It was another day of coronavirus panic with the Dow plunging almost 900 points until just before close when it rallied to close down 256.  The issue today was not so much the spread of the virus but that the measures being taken to contain the virus could have a profound impact on commercial and consumer activity, once again spurring concerns of a potential global recession.  But despite the fact that the S&P has had declines in 10 of the past 12 sessions, all three major indexes still finished the week with modest gains over last week.  The volatility index rose to nearly 42 putting it at its highest level since 2015.  Volume was again extreme at 14.2 billion shares traded. 

Wall Street drops over 3% on virus fears, travel shares slammed

With new cases of coronavirus reported today in New York City and San Francisco, the markets again went due south all day with the Dow losing 969 points despite continuing strong fundamentals.  Today those included new filings for unemployment falling, bolstering the view of a strong labor market.  Thus, today’s expert explained, “The market is clearly trading on emotion today.”  Investors are trying to test a bottom and haven’t found it yet, despite optimism that we had reached it last Friday.  As we search for that bottom, volume continues at a furious pace with 12 billion shares traded. 

Wall Street surges on Biden bounce

It turns out that the rout that has plagued the market in recent days was easily enough placated by just some small assurances that perhaps Bernie Sanders, with his Medicare For All proposals that scare the crap out of Wall Street, may well not be the Democrat nominee after all.  So after yesterday’s very strong showing by Joe Biden, who is largely considered even by the staunchest conservatives as being the most benign of all the contenders, the Dow soared a remarkable nearly 1200 points, more than recouping yesterday’s losses and now having recovered about half the correction from the record highs achieved a couple weeks ago.  But despite the recent panic, economic data remains strong with hiring exceeding expectations, the services sector expanding at its greatest pace in a year, and mortgage rates hitting a seven year low.  Volume was again quite furious at 11 billion shares. 

Another foul day on Wall Street after surprise Fed rate cut

So here’s the deal.  Exactly what Wall Street wanted from the Fed yesterday, exactly what caused the market to boom almost 1300 points yesterday, was delivered in spades today, only it came early, wasn’t expected until the Fed’s meeting later this month.  But today the Fed announced an emergency 0.5% rate cut.  At first the Dow spiked almost 400 points.  But then investors thought about it for about five minutes and then panicked thinking that if the Fed came through this early, they must really be worried.  With that , the rest of session saw a downward slump with a 1400 point range between the high and the low and finally closing down 785 points, giving up more than half of yesterday’s recovery, and  once again on extremely high volume of 14.7 billion shares.  It just proves the old adage, “Careful what you wish for, you just might get it.”  It also proves once again that the market is not always rational.  Still, the market has recovered more than a quarter of its losses from last week.  That’s how it goes.  One day everyone’s elated, the next everyone’s panicked.

Dow has biggest daily jump since 2009 as Wall Street buys the dip

The market was only looking for the tiniest bit of hope on the global economic threat posed by coronavirus. So despite the fact that China today reported its fewest new cases since the crisis began, what really moved the meter was Japan’s central bank promising to take steps to stabilize its markets.  That led investors to presume a virtual certainty that our central bank will be announcing another rate cut later this month and that zoomed the market back an astounding almost 1300 points, the biggest one-day gain in eleven years.  But as today’s expert pointed out, “The Fed can cut rates all it wants, that is not going to put a person in a factory producing a product if that person is quarantined.”  This illuminates the fact that the real problem in this crisis is the interruption of the global supply chains which could lead to very serious economic consequences if this virus is not brought under control.  However, if the inability to pay debts becomes a consequence of the crisis, then a rate cut certainly will help.  But the best news is that new cases in China are declining, at least today.  Tomorrow?  Stay tuned.  This incredible one-day rally was supported by an enormous trading volume of 14 billion shares. 

Succinct Summation of Week’s Events 2.28.20 (plus The Market's Response To Crisis)

I took some amusement this weekend from the usual summation, posted below, as you may note that Item #1 under "Positives" is exactly the same as Item 1 under "Negatives."  "Worst week since 2008 as markets shed > 10%" which is what we've all been reading since Friday.  Then there's "Orderly 10% repricing of markets has yet to turn into full-blown panic" listed under Positives, which I'm sure is the perspective our brokers would prefer us to have.  Both are completely factual statements, both valid.  One is just glass half-empty, the other glass half-full.  The other positives sort of pale by comparison as do the other negatives except for the one about Amateur Hour.  It does seem that the people in charge don't seem to know what they're doing, and that is where most of the fear is really coming from.  It doesn't inspire much confidence at all that the emergency response team was disbanded two years and has never been replaced.