Dow Plunged 1,000 Points This Week After Reddit Traders Stormed The Stock Market–What Happens Next?

Despite blowout corporate earnings and more solid news on the vaccine front, the stock market just posted its worst weekly performance in three months after Reddit traders squeezed Wall Street’s elite out of billions of dollars, sending prices of heavily shorted stocks up to atmospheric new highs and fueling concerns over market frothiness–but experts seem in broad agreement that the bull market can rage on. 

Key Facts

Investor sentiment took a massive hit over the “relentless option buying by retail investors taking advantage of a structural weakness in market,” Oanda Senior Market Analyst Edward Moya said Friday, noting that the Dow’s 1,000-point plunge this week was the index’s worst weekly loss since election uncertainty tanked sentiment in late October. 

“The market is not broken, but recent events have revealed some cracks,” says Commonwealth Financial Network Chief Investment Officer Brad McMillan, who thinks one likely result of the week’s frenzy could be that the price of options–which helped fuel some of the outsized meme-stock demand–rise to help curb “price hacking” in the future.

PROMOTED UNICEF USA BrandVoice | Paid Program UNICEF USA Celebrates The Passage Of The Global Child Thrive Act Grads of Life BrandVoice | Paid Program Hiring Talent Without College Degrees: What It Really Takes Civic Nation BrandVoice | Paid Program How Creativity Became Essential To Getting Out The Youth Vote In 2020

McMillan eschews concerns from other experts that the Reddit-fueled price mania could be a sign the market is in the middle of a bubble akin to the dot-com era in the late 1990s, but he says “crackdown” by regulators is likely.

The big question surrounding the week’s short squeeze remains around how regulators–and prosecutors–will respond to the volatility, with lawmakers urging the SEC to act quickly on investigations into potential market manipulation by retail traders, brokerages and hedge funds alike. 

Like McMillan, LPL Financial Chief Market Strategist Ryan Detrick is also adamant that the week’s events are not indicative of a market bubble or impending correction, though he concedes recent events point to “excessive optimism in certain segments of the equity markets,” particularly in big-cap names losing capital from institutions covering shorts at sizable losses.

“Don’t forget, overall market breadth is extremely healthy, and the credit markets are functioning just fine—we don’t see a repeat of 1999 like some are claiming,” says Detrick.

Crucial Quote 

“The damage this week is real, but it is also part of the game: Hedge funds and banks routinely make mistakes and suffer for it, and traders losing money is not a sign that the system is broken,” says McMillan. “Another source of worry is that somehow markets have become less reliable because of the price surges–perhaps so, but the dot-com boom didn’t destroy the capital markets, and the distortions were much greater then than now.”

Surprising Fact

Meme stocks GameStop and AMC skyrocketed 400% and 275%, respectively, this week, while the Dow, S&P 500 and tech-heavy Nasdaq all fell about 3%.

What We Don’t Know

How long the retail trading frenzy may continue. Meme stocks largely surged Friday, and Erlam says “a solution for this entire market dislocation will take time, which suggests this insane trading will continue a little while longer.”

Key Background

The bull market rallied to new highs earlier this month in light of fiscal stimulus expectations, vaccine optimism and corporate earnings that keep surpassing expectations. Democrats this week have indicated they’ll move forward with stimulus even if they can’t muster up much Republican support, and–though disappointing–Johnson & Johnson’s vaccine candidate results mean another vaccine could reach the market soon, notes Vital Knowledge Media Founder Adam Crisafulli. Meanwhile, big firms like Apple, Microsoft and Tesla all smashed earnings expectations this week.

 

What To Watch For

Sen. Elizabeth Warren (D-Mass.) has asked the SEC to respond to a list of questions about its GameStop response by February 5. That includes details over whether Reddit traders, hedge funds and brokerages may have influenced the market. With regards to the Reddit crowd, veteran trader Richard Smith, who heads up the Foundation for the Study of Cycles, said Thursday they could “absolutely” be vulnerable to regulatory scrutiny from a pump-and-dump standpoint, but he says it could be years before the mechanisms behind their market influence are leveled. McMillan, meanwhile, says he sees evidence of the “pump,” but doesn’t believe they’re looking to sell anytime soon.

Further Reading

‘Bubble Fueled By Cynicism’: Meme Stocks Surge Again As Reddit Traders Pile Back In—But Dow Falls 300 Points (Forbes)

The Hedge Fund Genius Who Started GameStop’s 4,800% Rally Now Calls It “Unnatural, Insane, And Dangerous” (Forbes)

Robinhood Raises $1 Billion In Emergency Funds As Platform Struggles With Reddit-Fuelled Trading Surge (Forbes)

Not Just GameStop: Here Are The Meme Stocks WallStreetBets Traders Are Pumping Up During This ‘Extremely Erratic’ Reddit Rally (Forbes)

Warren Demands SEC Response To GameStop Frenzy After It Vows To Protect Retail Traders From ‘Abusive Or Manipulative’ Activity (Forbes) Follow me on Twitter. Send me a secure tip

Jonathan Ponciano

Jonathan Ponciano

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

.

Business News 2.8K subscribers Despite blowout corporate earnings and more solid news on the vaccine front, the stock market just posted its worst weekly performance in three months after Reddit traders squeezed Wall Street’s elite out of billions of dollars, sending prices of heavily shorted stocks up to atmospheric new highs and fueling concerns over market frothiness–but experts seem in broad agreement that the bull market can rage on.”The damage this week is real, but it is also part of the game: Hedge funds and banks routinely make mistakes and suffer for it, and traders losing money is not a sign that the system is broken,” says McMillan. “Another source of worry is that somehow markets have become less reliable because of the price surges–perhaps so, but the dot-com boom didn’t destroy the capital markets, and the distortions were much greater then than now.”

.

More Contents:

Italy’s medicines agency approves AstraZeneca’s COVID vaccine | Health http://www.devdiscourse.com – Today[…] “The arrival of a third vaccine is an important contribution to the ongoing vaccination campaign,” AIFA Director General Nicola Magrini said […]0

VF Qu’est ce que la technologie PCR ? http://www.europe.easybranches.com – Today[…] France against e-commerce giant Amazon’s expansion 2 hours ago 3,867 Algeria launches its Covid-19 vaccination campaign 2 hours ago 3,962 Unemployed engineer charged with double murder in southeast France […]0

The COVID Vaccine Side Effects an Epidemiologist Is Warning You About bestlifeonline.com – Today[…] MD, chief patient safety officer at the Ohio State University Wexner Medical Center, shared his own vaccination experience in an interview with NBC […] ” And before you get your COVID vaccination, know that If You Take These OTC Meds, You Have to Stop Before Getting the Vaccine […] for Disease Control and Prevention (CDC), there are ways to soothe the former symptom after your vaccination […]3

News | City of Williamsburg, VA http://www.williamsburgva.gov – Today[…] The City of Williamsburg has posted its weekly vaccination update to its online hub that collects the latest coronavirus information and visual data […] Williamsburg Foundation, opened an information line for people to call with their questions about vaccination distribution in Greater Williamsburg: 877-724-1954 […] Peninsula Health District staff will contact those who have filled out the form to schedule a vaccination appointment […]0

Polio vaccine for 64 lakh kids in Karnataka on Sunday english.varthabharati.in – Today[…]     “In the polio vaccination drive on Sunday, 64,07,930 children in the 0-5 age group will be given the medicine through ora […] As the nationwide anti-Covid vaccination drive was launched on January 16, polio vaccination programme was postponed to January 31 from January 17 even in the southern state […]0

A Message from Superintendent Cheryl Watson-Harris mailchi.mp – Today[…]   Vaccination Survey   DCSD is partnering with the DeKalb Board of Health to offer vaccinations to employees i […]2

Join #TeamCVS – We’re Hiring! | LVN- Campbell, CA in Campbell, CA US | CVS HEALTH jobs.cvshealth.com – Today[…] * Collect and document vital signs on patients * Preparing, administering and providing vaccination services […]0

Wealthy couple chartered a plane to the Yukon, took vaccines doses meant for Indigenous elders, authorities said http://www.washingtonpost.com – Today[…] Yukon come from other parts of Canada, so proof of residency hasn’t been required at traveling vaccination clinics, Yukon Community Services Minister John Streicker told the Canadian Broadcasting Corp […] Workers from the vaccination clinic checked with the motel, and alerted law enforcement when they learned that the Bakers didn’t […]36

Covid vaccine UAE: Dubai to offer Sinopharm jabs – News http://www.khaleejtimes.com – Today[…] Al Khaja, CEO of DHA’s Clinical Support Services and Nursing Sector and Chairperson of the Covid-19 Vaccination Steering Committee, said: “Providing the Sinopharm vaccine is part of the DHA’s keenness to ensur […] the Sinopharm vaccine is part of the DHA’s keenness to ensure the availability of Covid-19 vaccination services to all segments of the community, especially the older age groups who are considered to be […] the DHA’s Contact Centre will reach out to those who already have pre-registered appointments for vaccination […]2

Update on mobile coronavirus testing centres in Buckinghamshire over the coming week, Little Marlow, Marlow : Local News http://www.hugofox.com – Today[…] The vaccination programme is no underway, but with cases of coronavirus still spreading in Bucks, it is mor […]0

Dubai Health Authority announces start of Sinopharm vaccines for COVID-19 | Health – Gulf News gulfnews.com – Today[…] the vaccine, the DHA’s Contact Centre will reach out to those who already have pre-registered for vaccination […] the Sinopharm vaccine is part of the DHA’s keenness to ensure the availability of COVID-19 vaccination services to all segments of the community, especially the older age groups who are considered to be […] the DHA’s Contact Centre will reach out to those who already have pre-registered appointments for vaccination,” said Dr Farida Al Khaja, CEO of DHA’s Clinical Support Services and Nursing Sector an […]20

How efficient is the Oxford AstraZeneca Covid vaccine? http://www.screenlately.com – Today[…] It’s hoped that, with the mixture of lockdown restrictions and widespread vaccination, the federal government will be capable of elevate most coronavirus measures by the Spring […]0

DHA to begin administering Sinopharm COVID-19 vaccine mediaoffice.ae – Today[…] the Sinopharm vaccine is part of the DHA’s keenness to ensure the availability of COVID-19 vaccination services to all segments of the community, especially the older age groups who are considered to be […] the DHA’s Contact Centre will reach out to those who already have pre-registered appointments for vaccination […] Al Khaja, CEO of DHA’s Clinical Support Services and Nursing Sector and Chairperson of the COVID-19 Vaccination Steering Committee […]0

ACT Cash Management Conference 2021 | The Association of Corporate Treasurers http://www.treasurers.org – Today[…] Positioned just after Brexit and as the world rolls out the vaccination for COVID-19, it is an ideal opportunity to look forward via a mix of keynotes, panel discussion […]N/A

LISTING OF DEPARTMENT OF PUBLIC HEALTH PRESS RELEASES http://www.publichealth.lacounty.gov – Today[…] at a County site received the date and location of their second dose appointment on their vaccination card, which will be 21 days after their first dose if they received a Pfizer vaccine, and 28 day […]1Pressure mounts on Ursula von der Leyen as shortcomings brutally exposed by EU vaccine fiasco http://www.telegraph.co.uk – Today[…] The inconvenient fact that the EU’s vaccination rollout was lagging far behind Brexit Britain would soon be forgotten in a flood of up to 40 […] to store jab from the British-Swedish company, which had seen the bloc fall further behind in the vaccination race […]   Spain announced that its vaccination programme would be delayed and were said to be increasingly impatient with the slow roll out […]14

What are Georgia’s new guidelines on international travel? http://www.agenda.ge – Today[…] present at the border a document that proves that he/she underwent a complete course of coronavirus vaccination […]71

UK imams mobilise to counter Covid-19 vaccine disinformation http://www.trtworld.com – Today[…] in Europe by the virus after registering nearly 95,000 deaths, is relying on its biggest-ever vaccination effort to end repeated cycles of lockdowns and restrictions […] When she received her vaccination, she posted a video in Urdu on social media aimed at the language’s speakers living in Britain […] A vaccination centre has even been set up in a mosque in Birmingham, Britain’s second biggest city, which has […]1

Seeking your views on the COVID-19 vaccination | Blogs | Royal College of Nursing http://www.rcn.org.uk – Today[…] The COVID-19 vaccination roll out programme continues to dominate the news headlines […]   We have an extensive set of online FAQs related to the vaccination programme – these address issues such as changes to the schedule, vaccination and fertility, vaccination in pregnancy and more […] COVID-19 vaccination. COVID-19 vaccination FAQs […]13

Sfnewsfeed.us – BRUSSELS, BELGIUM (1/28)- With the return… | Facebook http://www.facebook.com – Today[…] But in this case it is accompanied by a massive testing policy and the vaccination is accelerated, if the labs want it […]0

Pak to send special plane to China to receive first tranche of anti-COVID-19 vaccine | Health http://www.devdiscourse.com – Today[…] on the strategy of vaccine administration, said on Saturday that the country is geared up for the vaccination programme […] at the NCOC with provincial and district level vaccine administration across the country for vaccination in a systematic manner, it said […]0

Changes to the schedule for the weeks of Feb. 1 and March 1 myemail.constantcontact.com – Today[…] pleased and proud to announce that Hinsdale Central and Hinsdale South will be serving as COVID-19 vaccination sites for our employees and vendors, the employees from our feeder districts and the La Grange Area […]     In order to accommodate the vaccination process and ensure that the students in our hybrid model continue to receive the maximum amount o […] This decision will be based upon issues such as the teacher’s vaccination schedule […]

6 Stocks Set To Soar In 2021

It’s crystal ball time. Technology and environmental stocks have been the big winners of 2020, but which stocks will skyrocket next year? The enforced digitisation of the world during the pandemic drove the likes of Amazon, Apple, Google and Netflix to new highs, while making household names of companies such as Zoom.

Coronavirus vaccine breakthroughs in November sparked a much-vaunted rotation in market leadership from the “stay at home” play to “the reopening trade”. Many believe this has much further to run, with the potential for missteps along the way around mass vaccination delivery or central bank policy.  

Here are six stocks analysts are backing to shine in the New Year.

Cineworld

PROMOTED SAP BrandVoice | Paid Program The Pandemic Has Changed The World Of Sales — Here’s How We Leveraged Experience Management To Adapt Civic Nation BrandVoice | Paid Program COVID, College, And Action In A Year Of Crises UNICEF USA BrandVoice | Paid Program Sanitation Is More Than Just Toilets

The cinema chain, which has screens across the U.S. and U.K., has been an archetypal business victim of the pandemic. Worst still, it went into the pandemic with $8 billion of net debt, following two highly leveraged acquisitions in recent years. Investors took flight, with the stock collapsing by just over 90% as lockdown was announced.

It has rallied by 122% since November, driven by the vaccine news, plus a fundraising and new $450m debt facility. MORE FOR YOUWhy Huawei’s New Update Is Seriously Bad News For Android UsersWhatsApp Users Suddenly Get This Surprise New Boost From FacebookHuawei’s Striking New Billion-Dollar Gamble Targets Apple, Google (And Tesla)

Neil Wilson, chief market analyst at Markets.com, is backing Cineworld as a higher risk reopening trade. “This new debt facility should act as a bridge to get to a point where it can reopen screens in the U.K. and the U.S. and get the cash flow moving in the right direction again,” he said.

Assuming it can reopen its screens fully in May, it has sufficient cash to cover “2021 and beyond”. However, “if there is a stock trading on this vaccine roll-out it’s Cineworld”, he cautioned. 

Tekmar 

Tekmar operates in power and telecommunications infrastructure, delivering systems that protect cables under the sea. It’s a niche area, but fast-growing, with offshore wind projects a big customer.

AJ Bell investment director Russ Mould describes the U.K. micro-cap stock as high risk, given its size, but believes it can deliver for patient, longer-term investors.

Tekmar’s shares have sold off sharply in 2020, down 61.9%, in part down to contract delays that can punish small businesses disproportionately.

But Mould points to the company having net cash of £36 million -against a net asset value of £46 million- cost-cutting, and a new product launch due in 2021.

“Meanwhile, the company’s leading position in the niche of protection systems for subsea cables and pipes offers plenty of scope for upside. There are surely few markets as packed with potential as this one, as the UK prepares to launch its green industrial revolution and throw money at wind power, an area where Tekmar’s skills are likely to be in high demand,” he said.

Vulcan Materials

American building supplier Vulcan Materials has lagged the bounceback in U.S. equities, still trading down 3.8% for the year. Some analysts have highlighted the company’s hefty debt burden, at around three times earnings before interest, depreciation and tax as a red flag to investors.

However, Steve Clayton, head of equity funds at Hargreaves Lansdown, believes Vulcan is solidly positioned to prosper from the expected further financial stimulus under president-elect Joe Biden.

“Vulcan sells building aggregates like gravel and because these are expensive to transport, Vulcan benefit from local monopolies and oligopolies, giving them reliable pricing power in what should be increasingly active markets,”

With the requirement for extensive new housebuilding and infrastructure development in the U.S., he rates the stock a good play for more balanced investors.

IAG

British Airways owner IAG is a classic reopening trade. Its stock was pummelled earlier in the year as flight routes, down just over 74% at their worst in August. Since the November vaccine breakthroughs, IAG’s stock has surged by 80%, but remains 38.5% below where it started the year. 

Wilson said that while the recent rebound has effectively priced in flight routes reopening in 2021, “there could be further upside driven by on the ground improvements to travel”.

“In addition to the roll-out of vaccines, efforts by airlines like BA and airports like Heathrow to find creative solutions to ending quarantine requirements for travellers such as digital health passes will progress and make it easier for travel to take place,” he said. 

Wilson added that he does not expect the airline conglomerate’s shares to return to their pre-pandemic levels next year, as “passenger travel levels are not seen returning to 2019 numbers for some years”. 

“But a steady reopening of the economy and pent-up demand among holidaymakers to get out and travel ought to support earnings recovery in 2021,” he added, making it a good pick for balanced investors.  

Haemonetics

Braintree, Massachusetts-based Haemonetics is a global operator in blood and plasma services and supplies. Clayton said it is a fast-growing field and one in which the company has built a significant presence, operating in 16 different countries.

Haemonetics’ shares have had a relatively pedestrian year, near-halving in the savage March sell-off before going on to claw back two-thirds of those losses. They remain 16.6% down for the year but have likely been overlooked by many investors who were focusing on biotech this year.

Clayton believes the firm is well-positioned to benefit from advances in blood plasma therapies, with the stock a buy for balanced investors.

“Haemonetics leads the world in blood plasma technology and has a new generation of products that should boost profits at the same time as saving customers money,” he said.

“Looking ahead, there are over 750 new therapies that use plasma undergoing trials. As trials turn to product launches, demand looks set to grow for years to come.”

SSE

The U.K. power company, formerly known as Scottish & Southern Energy, is a good play for cautious investors, according to Mould. With stable revenue streams, it is paying a healthy 5.6% dividend with inflation-linked increases planned for the next two years.

But there could be a bit of a hidden growth story in the FTSE 100 stalwart too, he feels.

“SSE’s existing renewables portfolio and growth plans leave it well placed to be in the vanguard of the drive in the UK toward alternative sources of energy, a drive given fresh impetus by the government’s announcement in November of a multi-billion-pound green industrial revolution,” he said.

The value of SSE’s renewable assets was underlined earlier this year when the firm bagged a nice profit selling a stake in a wind project in Dogger Bank that SSE co-owns with Norway’s Equinor to Italian oil major ENI earlier this year.

“That seemed to confirm the clear upward trend in the market value of renewable assets and with oil majors potentially wading in at almost any price given their determination – and need – to reinvent themselves – SSE’s shares could yet offer greater potential for capital appreciation than many investors realise.”

James Phillipps

James Phillipps

I have been writing about wealth, the wealthy and investment for 20 years now. From how the rich amassed their fortunes to the investment strategies they employ to build and grow their assets, and what we can learn from them. But also what they spend it on, because all work and no play would be no fun. I was previously editor of Citywire Wealth Manager for eight years, where I saw first-hand both the good and bad of private client investment management. My goal is to help you identify opportunities while navigating the pitfalls. You can contact me at jamesp.freelance@gmail.com

.

.

GenZ Investor

Top 6 Stocks To BUY For 2021! Best Stocks To BUY NOW! This year is almost over, so investors are looking for stocks they believe will climb higher in 2021. In this video, I go over 6 stocks that I chose from a larger list of companies all expected to grow next year. Get 2 FREE STOCKS On WeBull when you deposit $100 (Worth Up To $1400): https://act.webull.com/k/FegF9ThR1Vio… Subscribe For Daily Stock Videos: https://bit.ly/2ulEGxL Check Out These Other Investing Videos: -TOP Dividend Stocks From Each Sector: https://youtu.be/KnR1u56AYDE -HUGE Dividend Growth Stocks: https://youtu.be/9V8Epc1o62w -BEST DIVIDEND Stocks Under $50: https://youtu.be/f9sn5ABsU9U -VALUE Stocks To BUY NOW: https://youtu.be/XHptXf8yrtE -PASSIVE INCOME Stocks: https://youtu.be/gH7OjqpMAU8 Always do your own research and speak with a qualified professional before making any investment decisions! I am not a financial advisor and I am not making any investment recommendations. These videos are for entertainment purposes only!

U.S. Stocks Claw Back Some Losses As Oil Prices Rebound

Topline: U.S. stocks recovered some losses on Thursday and oil prices soared, though the modest gains were not enough to offset the damage done by a weeks-long sell-off.

  • The Dow Jones Industrial Average was up 0.8%, or 170 points. The S&P 500 gained 0.3% while the Nasdaq gained 2.3%.
  • Tech stocks led the way on Thursday, with Amazon up 2.8% and Microsoft up 1.6%.
  • At a press conference on Thursday afternoon, President Trump said he would consider for companies who receive bailouts under his administration’s proposed $1 trillion stimulus plan.
  • Central banks are also continuing to act in order to cushion the economic blow of the coronavirus outbreak: yesterday, the European Central Bank announced an $818 billion bond-buying program and the Federal Reserve said it will act to shore up prime money market funds.

Crucial quote: “Central banks, particularly the Fed, really are playing whack-a-mole with the financial system,” Eric Winograd, senior economist at AllianceBernstein, told CNBC. “Every day, a new area of distress pops up and every day, they’re coming up with a new program or rebooting an old program.” The Federal Reserve is taking extraordinary steps to stabilize the U.S. economy: it has cut interest rates to almost zero, said it’s prepared to inject trillions of dollars into the overnight repo market, slashed bank reserve requirements and agreed to buy short term debt from companies with good credit ratings.

Big number: The price of oil bounced 24% on Thursday, gaining back about half of its losses from Wednesday, when it reached a multi-decade low. According to reporting in the Wall Street Journal citing people familiar with the matter, the Trump administration is considering intervening in the ongoing oil-price war between Saudi Arabia and Russia.

Key background: The Dow dropped 6.3% yesterday, nearly 2,000 points, while the S&P 500 was down 5.2% and the Nasdaq slid 4.7%. It was the eighth consecutive day where the S&P 500 swung more than 4% in either direction—that level of volatility is far worse than the previous record of six days during the Great Depression, according to LPL Financial. Last night, President Donald Trump signed a coronavirus relief bill into law. The bill includes free coronavirus testing and paid sick leave, among other measures. The Trump administration is also pushing for a $1 trillion economic stimulus package.

Follow me on Twitter. Send me a secure tip.

I’m an assistant editor on Forbes’ Money team, covering markets, fintech, and blockchain. I recently completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance and the Foreign Corrupt Practices Act.

Source: U.S. Stocks Claw Back Some Losses As Oil Prices Rebound

U.S. stocks plunged amid anxieties of a free-fall in oil prices and escalating spread of the COVID-19, with all three major indexes declining more than seven percent.  Trading was halted for 15 minutes after the S&P 500 fell by seven percent, and resumed at 9:49 local time (1349 GMT). Subscribe to us on YouTube: https://goo.gl/lP12gA Download our APP on Apple Store (iOS): https://itunes.apple.com/us/app/cctvn… Download our APP on Google Play (Android): https://play.google.com/store/apps/de… Follow us on: Website: https://www.cgtn.com/ Facebook: https://www.facebook.com/ChinaGlobalT… Instagram: https://www.instagram.com/cgtn/?hl=zh-cn Twitter: https://twitter.com/CGTNOfficial Pinterest: https://www.pinterest.com/CGTNOfficial/ Tumblr: http://cctvnews.tumblr.com/ Weibo: http://weibo.com/cctvnewsbeijing Douyin: http://v.douyin.com/aBbmNQ/

Stock Market Bloodbath: S&P, Dow Down More Than 7% In Worst Drop Since 2008

Topline: A surprise price war between oil producers Saudi Arabia and Russia, compounded by intense investor anxiety over the continued spread of the coronavirus, triggered massive market losses on Monday.

  • The Dow Jones Industrial Average lost 7.8%, or 2,014 points, the S&P 500 lost 7.6%, and the Nasdaq Composite lost 7.3%.
  • Early losses of 7% for the S&P 500 triggered the market’s circuit breaker mechanism, which halts trading for 15 minutes to prevent stocks from free-falling and give investors a chance to reassess.
  • The yield on the 10-Year U.S. Treasury bond plummeted to below 0.4%, signaling that investors are continuing to flee risky assets like stocks in favor of safer ones like bonds and gold.
  • Oil prices plummeted by more 20% during the day, seeing their worst drop since the Gulf War in 1991; the financial services sector also suffered, with shares of JPMorgan down nearly 13% and the Financial Select Sector ETF falling 10%.
  • Shares of Clorox hit a new 52-week high of $177 per share on Monday as investors flocked to the producer of cleaning products and disinfectants.

Key background: Over the weekend, Saudi Arabia—the world’s largest oil exporter—slashed its prices to levels not seen in 30 years after it could not convince Russia to agree to production cuts. The 14 members of OPEC (the Organization of the Petroleum Exporting Countries) along with some non-members, including Russia, met last week to discuss how to respond to the lagging demand caused by the spreading coronavirus. After negotiations fell apart, Saudi Aramco, the Saudi state-owned oil company, said it will offer major discounts in order to win over buyers. It’s planning to boost production to more than 10 million barrels a day and has even told some market participants that it could raise production to a record 12 million barrels a day, Bloomberg reports. Oil prices had lost more than 30% by Monday morning in response to the sudden supply shock.

Tangent: Shares of the world’s largest oil producers like BP and Royal Dutch Shell plummeted alongside global markets on Monday. Shares of BP dropped 19.2% to $25.25 on Monday— that translates to more than $20 billion in lost market value since the close of markets on Friday, and Royal Dutch Shell dropped 15.2% to $18.00 per share—that’s $25 billion in value lost.

Chief critic: President Donald Trump weighed in on Twitter about the market’s drop on Monday morning, writing, “Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!”

Follow me on Twitter. Send me a secure tip.

I’m an assistant editor on Forbes’ Money team, covering markets, fintech, and blockchain. I recently completed my master’s degree in business and economic reporting at

Source: Stock Market Bloodbath: S&P, Dow Down More Than 7% In Worst Drop Since 2008

Please follow my Instagram: http://instagram.com/arminhamidian67

John Kilduff, CNBC contributor specializing in energy trading, talks with Rachel Maddow about the dynamic between Saudi Arabia and Russia that has caused the price of oil to drop precipitously and clobbered a stock market already crippled by coronavirus concerns. Aired on 3/9/2020. » Subscribe to MSNBC: http://on.msnbc.com/SubscribeTomsnbc MSNBC delivers breaking news, in-depth analysis of politics headlines, as well as commentary and informed perspectives. Find video clips and segments from The Rachel Maddow Show, Morning Joe, Meet the Press Daily, The Beat with Ari Melber, Deadline: White House with Nicolle Wallace, Hardball, All In, Last Word, 11th Hour, and more. Connect with MSNBC Online Visit msnbc.com: http://on.msnbc.com/Readmsnbc Subscribe to MSNBC Newsletter: http://MSNBC.com/NewslettersYouTube Find MSNBC on Facebook: http://on.msnbc.com/Likemsnbc Follow MSNBC on Twitter: http://on.msnbc.com/Followmsnbc Follow MSNBC on Instagram: http://on.msnbc.com/Instamsnbc Saudi Arabia Seizes Oil Market By The Throat; Stock Market Shokes | Rachel Maddow | MSNBC

Dow Drops More Than 1,000 as COVID-19 Outbreak Threatens Economy

Specialist Erica Fredrickson works with a colleague on the floor of the New York Stock Exchange, Monday, Feb. 24, 2020. Stocks are opening sharply lower on Wall Street, pushing the Dow Jones Industrial Average down more than 700 points, as virus cases spread beyond China, threatening to disrupt the global economy. (AP Photo/Richard Drew)

The Dow Jones Industrial Average slumped more than 1,000 points Monday in the worst day for the stock market in two years as investors worry that the spread of a viral outbreak that began in China will weaken global economic growth.

Traders sought safety in U.S. government bonds, gold and high-dividend stocks like utilities and real estate. The yield on the 10-year Treasury fell to the lowest level in more than three years.

Technology stocks accounted for much of the broad market slide, which wiped out all of the Dow’s and S&P 500’s gains for the year.

More than 79,000 people worldwide have been infected by the new coronavirus. China, where the virus originated, still has the majority of cases and deaths. The rapid spread to other countries is raising anxiety about the threat the outbreak poses to the global economy.

“Stock markets around the world are beginning to price in what bond markets have been telling us for weeks – that global growth is likely to be impacted in a meaningful way due to fears of the coronavirus,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

The Dow lost 1,031.61 points, or 3.6%, to 27,960.80. At its low point, it was down 1,079 points.

The S&P 500 index skidded 111.86 points, or 3.4%, to 3,225.89. The Nasdaq dropped 355.31 points, or 3.7%, to 9,221.28 – it’s biggest loss since December 2018.

The Russell 2000 index of smaller company stocks gave up 50.50 points, or 3%, to 1,628.10.

Investors looking for safe harbors bid up prices for U.S. government bonds and gold. The yield on the 10-year Treasury note fell sharply, to 1.37% from 1.47% late Friday. It was at 1.90% at the start of the year. Gold prices jumped 1.7%.

Crude oil prices slid 3.7%. Aside from air travel, the virus poses an economic threat to global shipping.

Benchmark crude oil fell $1.95 to settle at $51.43 a barrel. Brent crude oil, the international standard, dropped $2.20 to close at $56.30 a barrel.

The slump in U.S. indexes followed a sell-off in markets overseas as a surge in cases of the disease in South Korea and Europe rattled investors.

Germany’s DAX slid 4% and Italy’s benchmark index dropped 5.4%. South Korea’s Kospi shed 3.9% and markets in Asia fell broadly.

South Korea is now on its highest alert for infectious diseases after cases there spiked. Italy reported a sharp rise in cases and a dozen towns in the northern, more industrial part of that country are under quarantine. The nation now has the biggest outbreak in Europe, prompting officials to cancel Venice’s famed Carnival, along with soccer matches and other public gatherings.

There are also more cases of the virus being reported in the Middle East as it spreads to Iran, Iraq, and Kuwait, among others.

The viral outbreak threatens to crimp global economic growth and hurt profits and revenue for a wide range of businesses. Companies from technology giant Apple to athletic gear maker Nike have already warned about a hit to their bottom lines. Airlines and other companies that depend on travelers are facing pain from cancelled plans and shuttered locations.

Technology companies were among the worst hit by the sell-off. Apple, which depends on China for a lot of business, slid 4.8%. Microsoft dropped 4.3%. Banks were also big losers. JPMorgan Chase fell 2.7% and Bank of America slid 4.7%.

Airlines and cruise ship operators also slumped. American Airlines lost 8.5%, Delta Air Lines dropped 6.3%, Carnival skidded 9.4% and Royal Caribbean Cruises tumbled 9%.

Gilead Sciences climbed 4.6% and was among the few bright spots. The biotechnology company is testing a potential drug to treat the new coronavirus. Bleach-maker Clorox was also a standout, rising 1.5%.

Utilities and real estate companies held up better than most sectors. Investors tend to favor those industries, which carry high dividends and hold up relatively well during periods of turmoil, when they’re feeling fearful.

The rotation into defensive sectors has made utilities and real estate the biggest gainers this year, while technology stocks have lost ground.

“The yields have been moving lower all year, so that’s providing a tail wind for utilities, for real estate,” said Willie Delwiche, investment strategist at Baird. “In the face of this heightened uncertainty, especially if it’s centered overseas, tech is going to bear some of the brunt of that because it’s been so popular, because it’s done so well, and because it has so much exposure to Asia.”

In the eyes of some analysts, Monday’s tank job for stocks means they’re just catching up to the bond market, where fear has been dominant for months.

U.S. government bonds are seen as some of the safest possible investments, and investors have been piling into them throughout 2020, even as stocks overcame stumbles to set more record highs. The 10-year yield on Monday was near its intraday record low of 1.325% set in July 2016, according to Tradeweb. The 30-year Treasury yield fell further after setting its own record low, down to 1.83% from 1.92% late Friday.

Traders are increasingly certain that the Federal Reserve will cut interest rates at least once in 2020 to help prop up the economy. They’re pricing in a nearly 95% probability of a cut this year, according to CME Group. A month ago, they saw only a 68% probability.

Of course, some analysts say stocks have been rising in recent weeks precisely because of the drop in yields. Bonds are offering less in interest after the Federal Reserve lowered rates three times last year — the first such cuts in more than a decade — and amid low inflation. When bonds are paying such meager amounts, many investors say there’s little real competition other than stocks for their money.

The view has become so hardened that “There Is No Alternative,” or TINA, has become a popular acronym on Wall Street. Even with Monday’s sharp drops, the S&P 500 is still within 4.2% of its record set earlier this month.

In other commodities trading Monday, wholesale gasoline fell 4 cents to $1.61 per gallon, heating oil declined 8 cents to $1.61 per gallon and natural gas fell 8 cents to $1.83 per 1,000 cubic feet.

Gold rose $27.80 to $1,672.40 per ounce, silver rose 35 cents to $18.87 per ounce and copper fell 3 cents to $2.59 per pound. The dollar fell to 110.74 Japanese yen from 111.62 yen on Friday. The euro weakened to $1.0842 from $1.0858.

AP Business Writer Stan Choe contributed.

By Elaine Kurtenbach / AP February 24, 2020

Source: Dow Drops More Than 1,000 as COVID-19 Outbreak Threatens Economy

All three major stock market indexes plummeted Monday amid fears of rising inflation and increased interest rates. At its lowest point, the Dow fell 1,600 points and closed down 1,100 points. It was the largest one-day point loss in the market’s history. CBS News business analyst Jill Schlesinger joins CBSN to explain what is affecting the markets.
%d bloggers like this: