What looked like a day of reprieve quickly turned into another nightmare in the stock market today. After a brutal Monday, the SPDR S&P 500 ETF (NYSEARCA:SPY) opened higher on Tuesday. However, by afternoon trading, the S&P 500 was down another 3%.
Boy oh boy. The decline isn’t all that surprising to readers of the Stock Market Today column. We’ve been talking about the coming economic impact of the coronavirus from China for two weeks now. What we didn’t expect was the velocity of this decline.
Already, the S&P 500 has shed 8% from its highs, which were hit just five trading sessions ago. These are the types of moves that make trading so tough. Painful as it may be though, another few percent off the highs may do us some good.
A dip of roughly 11.5% from the highs drops the SPY back down to the $300 mark. In that area, it will find the 200-day moving average and the big-time breakout level from October.
Boeing, GE and the Airlines
Boeing (NYSE:BA) has secured its first commercial order of 2020. February almost ended without an order on the books. ANA Holdings (OTCMKTS:ALNPY), the largest airline in Japan, plans to buy 15 of Boeing’s 787 Dreamliner jets. At list, that’s a $5 billion order, although discounts and other factors are sure to come into play. General Electric (NYSE:GE) will supply the engines for the new order, instead of Rolls-Royce.
Speaking of GE, the stock is not doing well. On Feb. 12, shares hit a new 52-week high of $13.26. Since then, it’s down about 15% and has declined for eight straight sessions. Of course, it doesn’t help when JPMorgan’s Stephen Tusa makes a bearish case.
On Tuesday, Tusa says that the “beat” for 2019 free cash flow was due to restructuring, and that the company is “recycling” capital between its business units. Tusa has not moved from his “sell”-equivalent rating.
As the coronavirus continues to spread outside of China, travel stocks are taking a beating. Specifically, the airlines are under pressure following United Airlines (NASDAQ:UAL) pulling its full-year guidance. United fell 6.5% and hit new 52-week lows. Spirit Airlines (NYSE:SAVE) and Southwest (NYSE:LUV) dropped 7.3% and 8.2%, respectively.
Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL), which fell 6.2% and 9.2%, respectively, were two of our top stock trades from Tuesday.
Movers in the Stock Market Today
The iShares Barclays 20+ Year Treasury Bond ETF (NASDAQ:TLT) hit a new 52-week high on Tuesday. The move comes on a continued flight to safety as investors fear the new virus. It also helps that Treasury bonds have a superior yield to most of its peers in the government fixed-income space. The 10-year yield hit a new record low on the move.
One of the few bright spots on Tuesday came from Nio (NYSE:NIO). Shares erupted 13.9% after the company made a deal with the city of Hefei. Nio will raise 10 billion yuan from the city government, and is in talks with another city too. As it the case with Tesla (NASDAQ:TSLA), investors like seeing the company raise funds when it can, alleviating fears of insolvency.
The energy sector continues to take its hits, as many equities in the group hit multi-year lows. Easing demand won’t help matters either. U.S. shale oil production growth will likely slow to the 600,000 to 700,000 barrels per day range this year and just 200,000 barrels per day in 2021, according to Schlumberger (NYSE:SLB) CEO Olivier Le Peuch. After that, growth may turn flat and not resume for three to five more years.
Verizon (NYSE:VZ) was holding up well earlier in the day, but has taken to selling lower on Tuesday. Still, the company’s 5G plan is coming along. In a demonstration at a commercial cell site in Texas, the company hit speeds of 4.2 gigabits per second. Verizon plans to have expanding 5G coverage throughout 2020.
Finally, Altria (NYSE:MO) shares continue to come under pressure thanks to its Juul unit. A total of 39 state attorney generals are forming a multi-state investigation to determine whether Juul is marketing toward teens. They are also investigating the company’s claims about helping smokers quit and the nicotine content of their products.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
