It wasn’t “Black Monday,” but today will not be remembered fondly over the course of market history as each of three major domestic equity benchmarks were punished amid intensifying concerns regarding the coronavirus from China. In the span of just two days, $1 trillion has been wiped off the market value of global equities.
- The S&P 500 tumbled 3.35%.
- The Dow Jones Industrial Average plunged 3.56%.
- The Nasdaq Composite shed 3.71%.
- UnitedHealth Group (NYSE:UNH) felt the “Bern” and was the worst-performing Dow name today, sliding 7.8%.
A lot of the talk about the coronavirus today had a “why today?” theme to it. What that means is that for weeks it appeared as though stocks in the U.S. and Europe, too (they deserve some credit across the pond) were holding up very nicely against the virus backdrop.
However, that sentiment started to shift last week as it became more apparent that the virus isn’t just a China problem. It’s a global problem.
In addition to China, Covid-19 is wreaking havoc on technology hubs such as Japan and South Korea. It has forced the cancellation of major tourist events in Italy, the Eurozone’s third-largest economy, prompting speculation that another recession there isn’t far off.
In other words, it’s not surprising that in late trading, all of the 30 Dow stocks were in the red. A dozen of those 30 were lower by 3% or more.
Burned by Bernie
As noted above, UnitedHealth was the worst-performing Dow component today, though the slump likely had little little to do with the coronavirus and plenty to do with Sen. Bernie Sanders winning the Nevada Democratic Caucus over the weekend. Sanders is a proponent of Medicare For All.
This isn’t a one-off problem for UNH stock. With the Silver State victory, Sanders continues building momentum and his odds of securing the Democratic nomination are getting shorter, not longer. With that in mind, the upcoming Super Tuesday primaries could be a real headwind for UNH.
I noted last week that American Express (NYSE:AXP) is one of the names most vulnerable to lingering coronavirus concerns because the virus is a real strain on global travel. Tourists are staying home and conferences and conventions are being canceled, none of which are good news for a stock like AXP. In fact, it was the second-worst name in the Dow today behind UNH.
Predictably, technology stocks were repudiated today with Apple (NASDAQ:AAPL) and Intel (NASDAQ:INTC) among the worst offenders. Mentioning that duo as it relates to the coronavirus is relevant due to the China supply chain issues these companies are facing.
“The spread of the coronavirus in China is credit negative for US semiconductor companies that generate a large portion of revenues from sales to Chinese manufacturers or depend on end market demand from Chinese consumers,” said Moody’s Investors Service.
Maybe, But Not Yet
There was some chatter that some industrial stocks could be avenues for waiting out the coronavirus issue and Caterpillar (NYSE:CAT) got a nice write-up from Barron’s, which noted the stock is inexpensive. However, that stock along with Boeing (NYSE:BA) and United Technologies (NYSE:UTX) each closed lower today.
Bottom Line on the Dow Jones Today
To quantify how bad things were for the Dow on Monday, none of its components finished in the green, none of the 11 S&P 500 sectors finished higher and the days best-performing assets were standard safe havens, such as gold and municipal bonds. That’s to be expected on a day that was the worst for the S&P 500 in two years.
As of this writing, Todd Shriber did not own any of the aforementioned securities. He has been an InvestorPlace contributor since 2014.