Another day, another low. S&P 500 futures went limit down just minutes into Sunday night’s trading session. However, stock futures were bouncing coming into Monday morning’s session. Unfortunately, bulls couldn’t hold the gains and we saw a new 52-week low in the stock market today.
This has been one of the most aggressive bear markets investors have ever seen. Combine it with a global pandemic and these are truly unique times we’re in. Since hitting a high on Feb. 19, we have not seen two consecutive days of gains in the SPDR S&P 500 ETF (NYSEARCA:SPY).
So what got traders to bid the market off limit down and briefly turn it positive on the day? The Federal Reserve.
Unlimited Quantitative Easing
On Monday morning, the Federal Reserve announced another wave of stimulus. Thus far, the markets haven’t cared. Stepping in to make hundreds of billions in security purchases, slashing interest rates to near zero and support the repo market hasn’t done anything to support the stock market thus far.
Or if it has, can you imagine the decline we’d be looking at without the Fed?
The Fed is upping its purchase of Treasury bonds to $75 billion per day this week (vs. total ownership of $2.5 trillion). It will also buy $50 billion worth of mortgage-backed securities per day this week. Finally the Fed will also buy corporate debt and corporate bond exchange-traded funds, as well as municipal bonds.
In other words, the Fed is “all in.”
Of course, it would help if Congress could get its stimulus package figured out, signed and put into motion.
David Tepper, the billionaire founder of Appaloosa Management and the owner of the Carolina Panthers NFL franchise, had some comments on the stock market today.
Investors shouldn’t be trading on leverage right now, Tepper said, because we could have more downside left to go. How much? He says 10% to 15% isn’t off the table given the current environment. If Congress can get a stimulus bill put together, the bottom may be closer.
If the 10% to 15% decline were to come to fruition though, the S&P 500 — which is already down 35% from its highs — could land somewhere between 1,957 and 2,072. The good news is that, that’s down “just” 39% to 42.3% from the highs, a zone we’re not all that far from.
Tepper wasn’t doom and gloom, he was simply matter of fact. But that’s not stopping him from nibbling at the moment, as he scoops up a bit of Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Micron (NASDAQ:MU) and Alibaba (NYSE:BABA).
Movers in the Stock Market Today
In response to the coronavirus from China, Boeing (NYSE:BA) announced that it will suspend production in Puget Sound, Washington. The shutdown is expected to start Wednesday, March 25 and last for at least 14 days. The company also stated that the CEO and chairman will give up pay for the time being and the company will suspend its dividend and stock buybacks.
Some promising news for Boeing is Goldman Sachs upgrading the stock to a “buy” after stating that “travel will be as popular as ever once COVID-19 is resolved.” Goldman put a price target of $173 on Boeing, which climbed 11.2% on the day and closed at $105.62.
Dollar General (NYSE:DG) needs some help keeping up with consumer demand during this pandemic. Dollar General is expecting to almost double its normal hiring rate by adding up to 50,000 employees by the end of April. Many will be seasonal workers, but it’s good to hear some hiring news out there. That’s not all, though.
Amazon is one of the companies currently still going strong in this pandemic. The company can’t get enough workers and CEO Jeff Bezos encourages anyone who has been laid off to go work for Amazon until they’re able to go back to work. It will be hiring for 100,000 new roles and will be giving higher wages to its hourly workers.
After Apple (NASDAQ:AAPL) recently shut down all stores outside of mainland China, Hong Kong, Taiwan and Macau, it had to put some guidelines in pace for its website orders. With the coronavirus outbreak, Apple had put a two-device limit on online iPhone purchases. While limits will remain for other devices, like the iPad and MacBook, the iPhone limit will be lifted.
Separately, Foxconn — a large producer for Apple — reassured everyone that it has secured enough workers to meet the “seasonal demand” at all major Chinese plants.