Man, it’s getting tough out there. The S&P 500 and PowerShares QQQ ETF (NASDAQ:QQQ) are down more than 15% from recent highs just seven trading sessions ago. Friday’s volatile session didn’t make it any easier in the stock market today.
From peak to trough, the Dow shed 1,000+ points in Friday’s session, the third time it’s done so this week. The VIX is hovering above $45 as volatility remains high. With coronavirus warnings and headlines popping up seemingly by the minute, and volatility running rampant, who in the world wants to buy into the weekend?
Nowhere to Hide
This action is uncommon, but it’s what makes trading so difficult. What took months to go from a $300 breakout to $339 in the SPDR S&P 500 ETF (NYSEARCA:SPY), the market has now undone in just a few days.
The craziest part? There’s nowhere to hide
A few names have been outperforming lately, like Square (NYSE:SQ) and Alteryx (NYSE:AYX). We covered SQ on Thursday and AYX on Friday in the Top Stock Trades column. But aside from a few stocks that are simply not down as much as the averages, cash and bonds are about the only things working right now.
The Select Sector SPDR Utilities ETF (NYSEARCA:XLU) was down more than 4% with two hours left of trading in the stock market today. It didn’t help that Emerson Electric (NYSE:EMR) warned that its Q2 revenue would see a $100 million to $150 million coronavirus-related hit. From peak to trough, the sector has roughly tracked the S&P 500, down 14.6% over the last 8 sessions. That’s not safety.
Gold prices via the SPDR Gold Trust ETF (NYSEARCA:GLD) are down more than 3% Friday. The GLD is also down a quick 7.2% from Monday’s high, spoiling the “flock to gold” theory a bit. Dividend stocks, safe-haven plays, REITs, blue chips — it doesn’t matter. You name it and it’s likely down.
Bonds are the exception, as the iShares 20+ Year Treasury Bond (NASDAQ:TLT) hit a new high in the stock market today. That’s as 10-year Treasury yields hit a new record low and as two-year yields sink 20 basis points to 0.905%. That’s the latter’s largest fall in yield since the Great Recession.
So in other words, things are going great.
Movers in the Stock Market Today
Apple (NASDAQ:AAPL) CEO Tim Cook made things seem a little better on Friday. While the virus may or may not hamper the company’s supply chain next quarter, it appears to be a temporary issue. Things are getting back to normal in terms of production, however, Cook says he sees no long-term impact.
“I see no long-term difference between what was happening four weeks ago vs. what’s happening today…The market takes time to recognize that, and it’s gonna do what it’s gonna do.”
Shares of Forty Seven Inc (NASDAQ:FTSV) were up big on the day, as rumors swirled about Gilead Sciences (NASDAQ:GILD) potentially scooping up the company in an acquisition. FTSV is one of the rare stocks that hit a new 52-week high in the stock market today. It now commands a $2.3 billion market cap.
Which would you rather buy, cruise companies or banks?
According to Odeon’s Dick Bove, a well-known bank analyst, now is still not the time to buy the banks. Declining loan quality will contribute to deteriorating earnings. That’s despite many stocks sporting low valuations, as well as massive losses due to the coronavirus. Citigroup (NYSE:C), Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM) are all down between 20% and 24% from their recent 52-week highs.
It doesn’t matter though, at least not to Bove. Now is not the time to buy, he says.
So how about cruise operators? Carnival (NYSE:CCL), Norwegian (NYSE:NCLH) and Royal Caribbean (NYSE:RCL) all surprisingly rallied on Friday, all by several percent. That’s despite the SPY down about 3% in afternoon trading. Nomura analysts argue that the impact of the virus is now priced into these stocks. All three are down about 40% from their highs. However, Nomura does warn that the headlines can continue to worsen.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL.
