Hasbro was among Monday’s leaders, as the Dow Jones today led stocks lower, despite new stimulus measures from the Federal Reserve.
Stocks slumped in opening trade Monday, after a premarket session whipsawed by Federal Reserve news and gridlock over the Senate’s $1.8 trillion stimulus measure. New York and Los Angeles began their first week under stay-at-home orders. Intel (INTC) took over the early lead on the Dow Jones today.
XIn premarket trade, futures had dived to a “limit-down” trading halt late Sunday, after a Senate failed to pass a $1.8 trillion stimulus package. The Senate had scheduled another vote for Monday afternoon. The session’a market outcome will likely be tied to progress toward a resolution.
The Dow Jones industrials traded down 1.4%. The S&P 500 fell 1.6%. The Nasdaq held to a 0.4% loss, as Hasbro (HAS) spiked 10% and Microchip Technology (MCHP) powered up more than 9% in early trade on the stock market today. Hasbro soared after its chief executive told CNBC that production in China would be back to full capcity by the end of the week.
Bonds rallied following the Fed announcement, then narrowed gains, leaving the 10-year yield down 2 basis points to 0.82%. Oil prices reversed higher, with West Texas Intermediate popping out of a 2% decline and trading 3.8% higher, to $23.50 a barrel.
Oil names bookended the S&P 500 in early action. U.K.-based oil driller TechnipFMC (FTI) topped the index with a 13% gain. At the bottom of the list, oil explorer Apache (APA) tumbled 9%.
Brace for the week’s market action, read IBD’s Investing Action Plan.
Hasbro, United At Top Of Nasdaq; Trading Floor Closes
Toymaker Hasbro (HAS) and United Airlines Holdings (UAL) jockeyed for the top slot among Nasdaq 100 stocks, up more than 6% apiece. Starbucks (SBUX) abandoned an early 5% loss and climbed 2%.
Gilead Sciences added 1.8%, after turning in a 3.6% gain last week. Moderna, the biotech that launched a coronavirus vaccine trial a week ago, gained 2.9%. BioNTech spiked more than 20%, continuing its eruptive trading performance from last week.
Market Note: The New York Stock Exchange trading floor will close today, the first time floor operations will be shuttered while the market is in operation since the system was initially put into place in 1871. Electronic trading will continue as per normal at the market’s open. No trading interruptions or delays are expected. Two NYSE employees reportedly tested positive for coronavirus last week.
Dow Jones Today: Intel Leads Mixed Action
Intel popped more than 4% to lead the Dow Jones today. BoeingBA ran a close second, up 3.3%. Meanwhile, Chevron (CVX), United Technologies (UTX) and Visa (V) all posted losses of more than 4%.
Dow Jones stock Nike (NKE) dropped 2.3%. The apparel brand will report fiscal third-quarter results after the stock market close Tuesday. Analysts expect the athletic gear giant’s earnings to decline 15% to 58 cents per share on revenue of $9.87 billion.
Investors will be focused on the coronavirus impact. Last week, Nike shut down stores across the world, including the U.S. and Canada.
Bank of America Securities upgraded the stock to a buy, from neutral rating on Friday. The note cut the stock’s price target to 85, from 105.
Federal Reserve Announces New Aid
The Federal Reserve ramped up its bond purchase commitments, announcing it would buy $125 billion in bonds today, vs. $110 billion in purchases on Friday. Purchases were to include $75 billion in Treasuries, $50 billion in mortgage-backed securities. The Fed also announced a a $300 billion lending program for Main Street businesses, as well as restarting the 2008-09 era Term Asset-Backed Loan Facility.
Fed officials also say they will continue to buy assets “in the amounts needed to support smooth market functioning.” Over the past week, the Fed and central banks around the world have been stepping up extraordinary monetary stimulus. The Fed has ramped up its buys of Treasuries and mortgage-backed securities. It’s already quickly burning through the “at least $700 billion” in asset buys the Fed promised, though it set no ceiling.
The Fed is providing support for money markets and will extend its remit to municipal bonds. The coronavirus rescue package could expand the Fed’s power to buy corporate debt.
Coronavirus Update: U.S.
Confirmed coronavirus cases in the U.S. accelerated above 35,000 early Monday, with 458 reported deaths.
New York state had reported 16,880 cases on Sunday, up 4,627 over the prior 24 hours. At least 150 persons had died. By Saturday, California had 1,468 cases and at least 28 deaths. Washington state on Sunday reported 1,996 cases and 95 deaths.
Key events underway for Monday include the massive stimulus measure, estimated at upwards from $1.8 trillion, under negotiation in the Senate. The bill was blocked by Democrats in a 47/47 vote on Sunday. Five Republicans were absent due to coronavirus quarantines.
Democrats sought increased funding for hospitals, and opposed measures that would allow the Treasury to direct a $500 billion portion of the package, while withholding for up to six months the names of companies receiving bailout funding.
States including New York, California, Illinois and Louisiana have issued statewide “stay-at-home” orders. Similar measures were set to take effect Monday and Tuesday in Ohio and Delaware. Major cities outside the shut-down states are issuing similar orders. Only workers for essential businesses health care workers, food suppliers, pharmacies, utilities are exempt from the orders.
Global Stock Markets: Red Ink, Except For Japan
Trading across Asia was steeply mixed on Monday. Hong Kong’s Hang Seng Index crumbled 4.9%. The Shanghai Composite veered 3.1% lower. The Sensex on the Bombay Stock Exchange in India spiraled to a 13.2% loss as 75 districts across the country placed work and travel restrictions until March 31, and the country’s 1.3 billion residents were asked to observe a “people’s curfew” and instructed to practice social distancing. The country reported 415 confirmed coronavirus cases, with seven deaths, on Monday.
In Japan, Tokyo’s Nikkei 225 jumped 2%, reopening after a holiday on Friday. Investors gained optimism after the International Olympic Committee said it was not currently considering cancelling the Olympic summer games.
In Europe, markets narrowed losses sharply in afternoon trade. The CAC-40 in Paris tightened up to a 0.9% loss. Frankfurt’s DAX traded down 0.9%. The FTSE 100 in London more than halved its early decline, to 1.8%.
Coronavirus Update: South Korea Nears Lockdown
The South Korean government on Saturday stepped up its already significant coronavirus response, strongly advising the shutdown of all religious, indoor sports, nightclubs and other entertainment and public facilities close for the next 15 days.
The move marked a change of tone for the country, which has been among the world leaders in rolling out test measures, relying on social distancing and adopting a disease-management model very different from that of China’s.
South Korea had 8,897 confirmed cases and a total of 104 deaths as of Sunday night. But the number of new cases accelerated from 87 on Friday to 147 on Saturday, triggering the change in tone from the government.
Dow Jones Today: Election Year Bears
Premarket futures trading showed the Dow Jones today set for early gains. The index ended Friday 34.7% below its January high, deep into the bear market’s den, after posting on Wednesday its first close below the 20,000 level since Jan. 24, 2017.
The three bear markets of this century have occurred in or around presidential election years. During the dot-com crash, the Dow Jones industrials peaked in January 2000. The index fell about 6% in 2000, falling into a bear market in March 2001. It bottomed a year after the 2001 terrorist attacks, in October 2002.
The peak of the George W. Bush market occurred when the Dow Jones Industrial average hit 14,198 in October 2007. The market declined 42.8% from that peak to the end of the 2008 election year. It bottomed 17 months after its peak, down 54.4%,in March 2009.
The current correction, dubbed the coronavirus stock market crash, points the Dow Jones Industrial Average toward the worst month in its history. It began after the Dow chalked up a high of 29,568 on Feb. 12. That came roughly four weeks after coronavirus news started to rattle markets in China and elsewhere in Asia.
The Dow has dropped in four of the five weeks since that high, ending Friday with a 24.5% decline so far in March. The Dow’s previous worst months came with a 23.2% crash in October 1987, a 21.7% dive in May 1940 and the famous market crash of October 1929, a 20.4% collapse.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Coronavirus Update: China
China reported only one new domestically transmitted case of coronavirus on Sunday. That was the first local infection in four days. Another 45 cases came to the country via travelers, putting the total confirmed cases number at 81,093. Deaths reported rose to 3,270. Hong Kong, not included in the mainland China numbers, saw a sudden spike in cases over the weekend.
Chinese investigators traced the first person believed infected by the coronavirus. An unconfirmed investigation tracked a Hubei-province resident apparently infected on Nov. 17. Following that date, authorities tracked between one and five new cases reported each day. Chinese doctors did not realize they were dealing with a new disease until late December, according to the South China Morning Post.
Find Alan R. Elliott on [email protected]_Aelliott